UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   -----------

                                    FORM 10-K

     (MARK ONE)   ANNUAL  REPORT   PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
                  SECURITIES AND EXCHANGE ACT OF 1934

                     FOR THE PERIOD ENDED DECEMBER 31, 2003

                                       OR

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

                  FOR THE TRANSITION PERIOD FROM ______ TO ______

                         COMMISSION FILE NUMBER 0 - 1325


--------------------------------------------------------------------------------

                               VICOM, INCORPORATED

             (Exact name of registrant as specified in its charter)

                                    MINNESOTA

         (State or other jurisdiction of incorporation or organization)

                                  41 - 1255001

                        (IRS Employer Identification No.)

              9449 SCIENCE CENTER DRIVE, NEW HOPE, MINNESOTA 55428

                    (Address of principal executive offices)

                   TELEPHONE (763) 504-3000 FAX (763) 504-3060

                The Company's Internet Address: www.vicominc.net

     (Registrant's telephone number, facsimile number, and Internet address)

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act:

                           Common Stock (no par value)

<PAGE>
                                       2

      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  and 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  references  in Part III of this Form 10-K or any  amendment to
this Form 10-K / /

      Indicate by check mark whether the registrant is an accelerated  filer (as
defined in Rule 12b-2 of the Act).

                                 Yes |_| No |X|

      As of June 30, 2003 (the most recently  completed  fiscal second quarter),
the  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant,  computed by  reference  to the average  high and low prices on such
date as reported by the Nasdaq Smallcap was approximately $29,012,556.

      As of March 15,  2003,  there were  19,533,138  outstanding  shares of the
registrant's common stock, no par value stock.

================================================================================

<PAGE>
                                       3

                       Documents Incorporated By Reference

      Portions of the registrant's definitive proxy statement to be filed within
120  days  after  the  end of  the  fiscal  year  covered  by  this  report  are
incorporated by reference into Part III hereof.

                                Table of Contents

  Part I          Item 1.     Business
                              Summary
                              Business Industry Overview
                              Products and Services
                              MultiBand Consumer Services
                              Risk Factors
                  Item 2.     Properties
                  Item 3.     Legal Proceedings
                  Item 4.     Submission of Matters to a Vote of Security
                              Holders
Part II
                  Item 5.     Market for the Registrant's Common Equity and
                              Related Shareholder Matters and
                              Issuer Purchases of Equity Securities
                  Item 6.     Selected Financial Data
                  Item 7.     Management's Discussion and Analysis of Financial
                              Condition and Results of
                              Operations
                  Item 7A.    Quantitative and Qualitative Disclosures About
                              Market Risk
                  Item 8.     Consolidated Financial Statements and
                              Supplementary Data
                  Item 9.     Changes in and Disagreements with Accountants on
                              Accounting and Financial
                              Disclosure
                  Item 9A.    Controls and Procedures
Part III
                  Item 10.    Directors, Executive Officers, Promoters and
                              Control Persons of the Registrant
                  Item 11.    Executive Compensation
                  Item 12.    Security Ownership of Certain Beneficial Owners
                              and Management
                  Item 13.    Certain Relationships and Related Transactions
Part IV
                  Item 14.    Principal Accountant Fees and Services
                  Item 15.    Exhibits, Financial Statement Schedules, and
                              Reports on Form-8K
                              Signatures

<PAGE>
                                       4

ITEM 1
BUSINESS

      Vicom, Incorporated (Vicom) is a Minnesota corporation formed in September
1975. Vicom has two operating  divisions:  1) Multiband  Business Services (MBS,
legally known as Corporate Technologies,USA,  Inc. dba Multiband), and Multiband
Consumer   Services  (MCS),   which  encompasses  the  wholly  owned  subsidiary
corporations, Multiband USA, Inc. and URON, Inc.

      Vicom completed an initial public offering in June 1984. In November 1992,
Vicom became a non-reporting  company under the Securities Exchange Act of 1934.
In July 2000, Vicom regained its reporting  company status.  In December,  2000,
Vicom stock began trading on the NASDAQ stock exchange under the symbol VICM.

      Vicom's website is located at: www.vicominc.net.

      From its inception until December 31, 1998,  Vicom operated as a telephone
interconnect  company  only.  Effective  December 31, 1998,  Vicom  acquired the
assets of the Midwest  region of Enstar  Networking  Corporation  (ENC),  a data
cabling  and  networking  company.  In late  1999,  in the  context of a forward
triangular  merger,  Vicom, to expand its range of computer products and related
services,  purchased the stock of Ekman, Inc. d/b/a Corporate Technologies,  and
merged  Ekman,  Inc.  into the newly  formed  surviving  corporation,  Corporate
Technologies,  USA, Inc. (MBS).  MBS provides voice,  data and video systems and
services to business and  government.  MCS began in February  2000. MCS provides
voice,  data and video services to multiple  dwelling  units (MDU's),  including
apartment buildings and time share resorts.

      As of March 15, 2004, MBS was providing telephone equipment and service to
approximately 800 customers, with approximately 17,000 telephones in service. In
addition,  MBS provides  computer  products and services to approximately  1,800
customers. Telecommunications systems distributed by MBS are intended to provide
users  with  flexible,   cost-effective  alternatives  as  compared  to  systems
available from major telephone  companies,  including those formerly  comprising
the Bell System and from other interconnect telephone companies.

      MBS provides a full range of voice, data and video communications  systems
and service,  system integration,  training and related  communication sales and
support  activities for commercial,  professional and  institutional  customers,
most of which are located in Minnesota and North Dakota.  MBS purchases products
and equipment from NEC America, Inc. (NEC), Cisco Systems, Inc. (Cisco),  Nortel
Networks Corp. (Nortel), Tadiran  Telecommunications,  Inc. (Tadiran), and other
manufacturers of communications and electronic products and equipment.  MBS uses
these  products to design  telecommunications  and  computer  systems to fit its
customers' specific needs and demands.

      The products sold by MBS include Private Branch Exchange (PBX),  telephone
systems, hubs and routers used as interconnection  devices in computer networks,
personal  computers,  desktop  video-conferencing  units, and the wire and cable
products required to make all the other  aforementioned  products  integrate and
operate as necessary.  MBS has trained  staff that install,  maintain and repair
the products we sell.  Repair of products is  performed  under either a time and
materials  basis  or an  extended  service  contract  basis,  at the  customer's
election, once the manufacturer's original warranty on a product has expired.

      Extended service  contracts  offered by MBS generally range in length from
12 to 36 months.  The contracts  provide for repair or replacement of all broken
or  non-working  materials  and the  labor  necessary  to make such  repairs  or
replacements,  subject  to  exceptions  for  customer  abuse or  negligence  and
problems

                                       5

<PAGE>

due to fire, flood or other causes beyond MBS's control.

      See Page 22 for financial information for each segment.

MULTIBAND BUSINESS INDUSTRY OVERVIEW

      MBS recently  expanded its efforts to establish  itself within the rapidly
evolving telecommunications and computer industries.

      In the current  climate of intense  global  competition  and  accelerating
technological  change,  businesses  increasingly  depend  upon  technology-based
solutions  to  enhance  their  competitive   position,   and  to  improve  their
productivity  and the quality of their products and services.  Today's  business
environment mandates the availability of efficient voice and video communication
channels  and  information  in  formats  suited  to a  wide  variety  of  users.
Businesses  are  looking  to a  variety  of  new  technologies  to  enhance  the
performance of their communication  systems and to allow Information  Technology
(IT)  systems  to  collect,  analyze  and  communicate  information  within  the
enterprise  and among  customers and  suppliers.  An  organization's  ability to
integrate  and deploy new  communication  and IT  technologies  in a unified and
cost-effective  manner has become critical to competing  successfully in today's
rapidly changing business environment.

      The  markets  and   technologies  for   communication   equipment  and  IT
applications  and  systems  continue  to  converge  as  communication  equipment
migrates  from  proprietary  switches to  software-driven  systems  operating on
standardized computer platforms.  As a result,  businesses are integrating their
communication  and IT  systems.  As  previously  separate  communication  and IT
technologies converge and their interoperability  increases,  more organizations
will seek a unified technology  solution.  MBS believes that these organizations
will  attempt  to  reduce  costs  and  management   complexity  by  establishing
relationships  with a small number of providers that offer a broad range of both
communication  and IT products and services  throughout the full life-cycle of a
project.  MBS  believes it has  positioned  itself to be one of those  providers
through expertise gained in its historical operations and via acquisitions.  MBS
has personnel that  understand the voice and data sides of the equation.  MBS is
able to provide a consultative selling approach, whereby it is able to match the
appropriate technology solution to its customers needs; whether that solution is
an IP telephony application, a traditional PBX application, or a hybrid of both.

      While  customers   continue  to  rely  heavily  on  technology  to  reduce
transaction  costs by  increasing  operational  efficiencies,  the  bias  toward
software-centric  solutions in lieu of hardware  continues.  Notwithstanding the
slow economic  conditions,  growth  continues to occur in areas such as customer
contact  solutions,   CTI  (computer  telephony  integration),   unified  media,
convergence (IP telephony), and mobility.

      Current financial pressures also are making it increasingly  difficult for
communications  equipment  manufacturers to support a direct distribution model.
Most independent  distribution  channels lack an adequate geographic  footprint,
infrastructure,   processes,   and   resources   to   effectively   fulfill  the
manufacturer's  need to deploy complex high-end technology  solutions.  This has
resulted in the need for systems  integration and support services through third
party  providers.  A key competency being driven by the market is the ability to
effectively   integrate  disparate  technology  platforms  into  enterprise-wide
applications  solutions.  Again, the range and depth of MBS's experience enables
MBS to provide businesses with overall technology solutions.

         As a result of these factors, demand for communication services and
products has been relatively flat. InfoTech, a market research firm
specializing in telecommunications market information, estimates that the U.S.
market for traditional voice PBX systems will continue to decline over the next
three years as enterprises shift to converged solutions, a combined form of

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                                       6

voice and data,  also referred to as IP Telephony.  IP shipments are expected to
surpass  traditional  PBX  shipments  sometime  in  2006.  Recent  slowdowns  in
technology spending may delay this development, however. Overall revenues in the
U.S.  marketplace  for voice and convergence are projected to reach $5.5 billion
by 2006.  Field  maintenance  and repair is the  largest,  but  slowest  growing
segment in services  associated  with the voice  marketplace.  This includes the
maintenance and repair of PBX, Key/Hybrid,  Voice Processing:  IVR, CTI, ACD and
fax.

PRODUCTS AND SERVICES

CORPORATE TECHNOLOGIES, USA (MBS)

      MBS provides other technical and customer services as described hereafter.

PRICING AND AVAILABILITY

      We use our volume and purchasing power to achieve  competitive  pricing of
goods for our  clients.  We have the ability to provide a web-based  client site
that allows  clients to see  availability  and costs of hardware and software in
real time  through the Internet by accessing  current  pricing and  availability
from our manufacturers'  Internet websites.  This Internet-based model allows us
to extend product  procurement  services beyond the traditional 8 a.m. to 5 p.m.
schedule  and into a 7 days a week,  24 hours a day  service,  providing  a high
level of client flexibility.

WARRANTY POLICY

      We strongly  believe in the  philosophy  of "Service what you sell." We do
not knowingly sell any hardware  product that we do not have authorized  service
personnel  to  facilitate  any  warranty  work  that  needs to be  done.  We are
committed  to  fulfill  all  warranty  service  calls  in  accordance  with  the
manufacturer's warranty, which range in length from 30 days to one year from the
date of sale. Warranty costs incurred to date are minimal.

ON SITE AND DEPOT REPAIR

      MBS is  authorized  for  depot  and  on  site  warranty  repair  for  many
manufacturers,  including Apple Computers,  Nortel, Inc., Cisco, Hewlett Packard
Co., International Business Machines Corp. (IBM), Sun Microsystems, Inc., Compaq
Computer Corp., Xerox Corp., and Okidata Corp. With over $500,000 in spare parts
inventory,  we have made a conscious  effort to have the part clients need, when
they need it.

WIDE AREA NETWORK CONNECTIVITY

      Our staff of Cisco and Nortel Wide Area Network  (WAN)  trained  engineers
assist  organizations  with  integrating  their  multiple  sites,  allowing  the
exchange of information between geographically  separated sites. Our association
with local Internet  Service  Providers (ISPs) gives us the opportunity to offer
organizations  with  multiple  locations a single  source  provider  providing a
cost-effective solution to WAN needs.

TECHNICAL SUPPORT FOR NETWORKING

      We are committed to obtaining the highest vendor authorizations  available
to  indicate  our  knowledge  and  expertise  to today's  complex  technological
environment.  Becoming the only  Microsoft  Solution  Partner,  Novell  Platinum
Reseller and Sun Microsystems Competency 2000 Certified reseller in North Dakota
is an indication of this  commitment.  Our staff of Certified  Novell  Engineers
(CNEs),  Microsoft  Certified System Engineers (MCSEs),  Sun Microsystems System
Engineers,  as well as certified  personnel in products such as Nortel and Cisco
routers,  gives MBS an  advantage  over other  resellers  in North  Dakota.  The
knowledge and skills of our system  engineers helps  organizations  meet today's

<PAGE>
                                       7

challenges  and  maintain  a  market  advantage.  Our  close  relationships  and
certification  levels with our vendors gives our staff access to resources  that
few other value added resellers can provide.

CONSULTING

      As a  multi-service,  multi-vendor,  multi-site  integrator,  MBS  has the
extensive  infrastructure  to offer  solutions to complex  technical  challenges
through our consulting service.  With years of experience in Local Area Networks
(LAN) and WAN technology,  our consultants are dedicated to finding the solution
that will solve our  customers'  needs now and in the future.  We  specialize in
providing an integrated cost-effective, single source solution.

SALES AND MARKETING

      As of  March  15,  2004,  we had 25 sales  and  marketing  personnel  with
expertise  in  telecommunications,  computers  and network  services.  MBS has a
consultative  approach  to  selling,  in  which  the  salesperson  analyzes  the
customer's  operations  and  then  designs  an  application-oriented   technical
solution to make the customer more  efficient and  profitable.  MBS uses several
techniques  to  pursue  new  customer   opportunities,   including  advertising,
participation in trade shows, seminars and telemarketing.

CUSTOMERS

      MBS provides its products  and services to  commercial,  professional  and
government  users  within  the  states  of  Minnesota  and North  Dakota.  MBS's
customers  are  diverse  and  represent  various  industries  such as  financial
services,  hospitality,  legal, manufacturing,  and education. In the year ended
December 31, 2003,  MBS received  17.5% of its revenues  from  Meritcare  Health
System and 6.0% of its revenues from Noridian  (Blue Cross Blue Shield).  In its
year ended December 31, 2002, MBS received  approximately  22.8% of its revenues
from two  customers,  Merit Care and Microsoft  Great Plains.  In its year ended
December 31, 2001,  MBS received  approximately  21.7 % of all revenues from two
customers.  Those two  customers  were  Microsoft  Great Plains and the State of
North Dakota.

CUSTOMER SERVICE

      MBS has 20 full-time  customer  service and related support  personnel who
assist in project management  duties,  post-sale  communications  (which include
site surveys),  coordinated  network services,  and end-user training.  Each key
account is assigned its own individual customer service representative to ensure
efficient implementation. The customer service representative works closely with
the  sales  representative  and  main  technician  assigned  to the  project  to
facilitate the utmost in customer satisfaction.

BACK OFFICE

      Back office  refers to the hardware and software  systems that support the
primary  functions of our operations,  including sales support,  order entry and
provisioning, and billing.

      Order  entry  involves  the  initial  loading  of  customer  data into our
information  system.  Currently  our sales  representatives  take orders and our
customer  service  and  purchasing  representatives  load the  initial  customer
information  into our ILS  (Integrated  Logistic  System) billing and accounting
system. We use the ILS to manage and track the timely completion of each step in
the provisioning and installation  process. Our system is designed to enable the
sales or customer service representative to keep an installation on schedule and

<PAGE>
                                       8

notify the customer of any potential  delays.  Once an order has been completed,
we update our  billing  system to  initiate  billing of  installed  products  or
services.


SUPPLIERS

      As previously  mentioned,  MBS purchases  products and equipment from NEC,
Tadiran,  Cisco,  Nortel, and other manufacturers of communications and computer
products.  The  telecommunication  products  are  purchased  directly  from  the
manufacturers.  The  computer  products are  purchased  both  directly  from the
manufacturer and also indirectly from major wholesalers such as Ingram Micro and
Tech Data Corporation.

      In 2003,  Ingram Micro supplied 60.55% and Dell computer supplied 8.35% of
total products purchased. In 2002, Ingram Micro supplied 57.7% and Dell Computer
11.8% of total products purchased. In 2001, Ingram Micro supplied 37.8% and Tech
Data provided 18.9% of total products purchased.

      The  products MBS purchase  are  off-the-shelf  products.  MBS has several
alternate  suppliers of computer  products and could substitute any one of these
suppliers  with an  alternate  supplier  fairly  quickly  on the same or similar
terms.

      MBS  has  a  distribution   agreement  with  NEC,  its  main  supplier  of
telecommunication  products,  which expires June 30, 2004. MBS could replace NEC
with an alternate supplier fairly quickly,  but with a less competitive product.
However,  MBS's  replacement  of NEC could  have a  material  adverse  effect on
Vicom's business, operating results and financial condition.

MULTIBAND CONSUMER SERVICES

      We have  expanded our strategy to include the vast  potential of the multi
dwelling unit (MDU) market. Our experience in this market suggests that property
owners and managers are  currently  looking for a solution that will satisfy two
problems.  The first  problem  that they are dealing  with is how to satisfy the
residents who desire to bring satellite  television  service to the unit without
being visually unattractive or a  structural/maintenance  problem. The second is
how to provide  competitive  access for local and long distance  telephone cable
television and Internet services.  Our MCS offering addresses these problems and
provides the consumer several benefits, including:

      o     Lower Cost Per Service

      o     Blended Satellite and Cable Television Package

      o     Multiple  Feature  Local  Phone  Services  (features  such  as  call
            waiting, call forwarding and three-way calling)

      o     Better than Industry Average Response Times

      o     One Number for Billing and Service Needs

      o     One Bill for Local, Long Distance Cable Television and Internet

      o     "Instant On" Service Availability

      As we develop and market this package,  we will keep a marketing  focus on
two levels of customer for this  product.  The primary  decision-makers  are the
property  owners/managers.  Their  concerns  are  focused  on  delivering  their
residents  reliability,  quality of service,  short  response  times,  minimized
disruptions  on

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                                       9

the property,  minimized  alterations to the property and value added  services.
Each of these  concerns is addressed in our contracts  with the property  owner,
which include annual reviews and 10 to 15 year terms as service providers on the
property.  The secondary customer is the end-user.  We will provide the property
with  on-going  marketing  support for their  leasing  agents to deliver  clear,
concise and timely information on our services. This will include simple sign up
options that should maximize our penetration of the property.

      When taken as a whole, and based on Vicom's interpretations of U.S. Census
Bureau statistics,  cable television,  telephone and internet services currently
generate  over $170 billion of revenues  annually in the U.S.  These  statistics
indicate   stable  growing  markets  with  demand  that  is  likely  to  deliver
significant  values  to  businesses  that can  obtain a  subscriber  base of any
meaningful size.

MULTIBAND CONSUMER INDUSTRY ANALYSIS

Strategy

      For the  near  future,  the  services  described  below  will  be  offered
primarily in Midwestern states. Our primary competition will come from the local
incumbent providers of telephone and cable television services.

Local Telephone Service

      In   Minnesota,   we  expect  to   compete   with   Qwest   Communications
International,  Inc.  (Qwest) for local telephone  services.  Although Qwest has
become the standard for local telephone service,  we believe we have the ability
to  underprice   their  service  while   maintaining  high  levels  of  customer
satisfaction.

Cable Television Service

      In Minnesota,  we expect to compete with Comcast Corporation (Comcast) for
pay-TV  customers.  Comcast is the cable  television  service  provider that has
resulted from the merger and  acquisition of two  competitive  cable  providers.
This actually has improved the overall continuity of service. However, we have a
significant  consumer  benefit in that we are  establishing  private rather than
public  television  systems,  which  allows us to deliver a package  that is not
laden with local "public access"  stations that clog the basic service  package.
In essence,  we will be able to deliver a  customized  service  offering to each
property based upon pre-installation market research that we perform.

Long Distance Telephone Service

      AT&T  Corporation  (AT&T),   WorldCom  Inc.  dba  MCI  (MCI),  and  Sprint
Corporation  (Sprint) are our principal  competitors  in providing long distance
telephone service. They offer new products almost weekly. Our primary concern in
this  marketplace  is to assure  that we are  competitive  with the most  recent
advertised offerings in the "long distance wars." We will meet this challenge by
staying within a penny of the most current  offering,  while still maintaining a
high gross margin on our product.  We accomplish  this through  various  carrier
agency  associations.  We  expect to  generate  a high  penetration  in our long
distance services amongst our local service subscribers because private property
owners in the shared tenant environment (similar to a hotel environment) are not
required to offer multiple long distance carriers to their tenants.

Internet Access Service

      The clear  frontrunners  in this  highly  unregulated  market are  America
Online,  Inc. and CompuServe  Corp.  They compete with local exchange  carriers,
long  distance  carriers,  Internet  backbone  companies  and  many  local  ISPs
(Internet  Service  Providers).  Competition  has  driven  this  to a flat  rate
unlimited access dial

<PAGE>
                                       10

up service  market.  The general  concern among  consumers is the quality of the
connection  and the speed of the  download.  Our  design  provides  the  highest
connection speeds that are currently available. The approach that we will market
is "blocks of service."  Essentially,  we deliver the same high bit rate service
in small, medium and large packages, with an appropriate per unit cost reduction
for those customers that will commit to a higher monthly expenditure.

Market Description

      We are currently marketing MultiBand services to MDU properties  primarily
throughout  Minnesota,  North Dakota,  Missouri and Florida.  We are focusing on
properties  that  consist of 50 or more units.  We will target  properties  that
range from 50 to 150 units on a  contiguous  MDU  property  for  television  and
Internet  access only. We will survey  properties  that exceed 150 units for the
feasibility of local and long distance telephone services.

      We are initially  concentrating on middle to high-end rental complexes. We
are also pursuing  resort area  condominiums.  A recent U.S. Census Bureau table
indicates  that there are more than 65,000  properties in the United States that
fit this profile.  Assuming an average of 100 units per complex, our focus is on
a potential subscriber base of 6,500,000.

      A recent Property Owners and Manager Survey,  published by the U.S. Census
Bureau,  shows that the rental properties are focusing on improving services and
amenities  that are available to their  tenants.  These  improvements  are being
undertaken to reduce tenant  turnover,  relieve  pricing  pressures on rents and
attract tenants from competing properties.  We believe that most of these owners
or managers are not  interested in being "in the  technology  business" and will
use the services that we are offering.  Various  iterations of this package will
allow the owners to share in the  residual  income  stream  from the  subscriber
base.

Number of Units/Customers

      At  December  31,  2003,  MCS had 8,246  units wired for service and 6,827
subscribers  using its  services(1,180  using voice services,  4,908 using video
services and 739 using internet services).


Employees

      As of March 15, 2004, Vicom employed four full-time management  employees.
As of that same date, MBS had 90 full-time employees,  consisting of 25 in sales
and marketing,  36 in technical  positions,  20 in customer  service and related
support,  10 in management and 9 in administration and finance.  As of March 15,
2004, MCS had 6 full-time employees, 2 in sales and the rest in operations.

RISK FACTORS

      Our  operations  and our  securities  are  subject  to a number  of risks,
including  but not limited to those  described  below.  If any of the  following
risks actually occur, the business,  financial condition or operating results of
Vicom and the trading  price or value of our common  stock  could be  materially
adversely affected.

General

      Vicom,  since 1998,  has taken several  significant  steps to reinvent and
reposition  itself to take  advantage of  opportunities  presented by a shifting
economy and industry environment.

      Recognizing that voice, data and video  technologies in the late twentieth
century were beginning to

<PAGE>
                                       11

systematically  integrate as industry  manufacturers were evolving technological
standards from "closed" proprietary networking  architetectures to a more "open"
flexible and integrated approach,  Vicom, between 1998 and 2001, purchased three
competitors  which, in the aggregrate,  possessed  expertise in data networking,
voice and data cabling and video distribution technologies.

      In  early  2000,   Vicom   created  its  MCS   division,   employing   the
aforementioned  expertise,  to provide communications and entertainment services
(local dial tone,  long  distance,  high-speed  internet and expanded  satellite
television  services) to residents in  Multi-Dwelling-Unit  properties (MDUs) on
one  billing  platform.   Although  MCS  revenues  (recurring  subscriber  fees)
accounted for less than 6% of overall Vicom revenues in 2003,  Vicom expects MCS
related  revenues to increase  significantly  in 2004 as a percentage of overall
revenues.  These  revenues are expected to provide higher gross margins than the
company's more traditional sales to commercial enterprises.

      The specific risk factors,  as detailed  below,  should be analyzed in the
context of the Company's anticipated MCS related growth.

NET LOSSES

      The  Company  had net  losses of  $4,365,004  for the  fiscal  year  ended
December 31, 2003,  $4,438,059  for the fiscal year ended December 31, 2002, and
$5,325,552  for the fiscal  year ended  December  31,  2001.  Vicom may never be
profitable.

      The prolonged effects of generating losses without  additional funding may
restrict our ability to pursue our business  strategy.  Unless our business plan
is  successful,  an investment in our common stock may result in a complete loss
of an investor's capital.

      If we cannot achieve profitability from operating  activities,  we may not
be able to meet:

      o     our capital expenditure objectives;

      o     our debt service obligations; or

      o     our working capital needs.

DEPENDENCE ON ASSET-BASED FINANCING

      Vicom currently depends on asset-based  financing to purchase product, and
we cannot  guarantee  that  such  financing  will be  available  in the  future.
Furthermore,  we need additional  financing to support the anticipated growth of
our MCS  subsidiary.  We cannot  guarantee  that we will be able to obtain  this
additional financing.

      However,  the Company  recently  introduced a program where it can control
capital  expenditures by contracting  Multiband services and equipment through a
landlord or third party  investor  owned  equipment  program.  This program both
significantly   reduces  any  Company  expenditures  in  a   Multi-dwelling-unit
installation  and permits the  Company to record  revenues  from the third party
sale of said equipment.

GOODWILL

      In June 2001,  the Financial  Accounting  Standards  Board (FASB)  adopted
Statement of Financial  Accounting  Standards  (SFAS) 142,  "Goodwill  and Other
Intangible  Assets" which changes the  amortization  rules on recorded  goodwill
from a monthly amortization to a periodic "impairment" analysis for fiscal years
beginning after December 15, 2001. In 2003, the Company  retained an independent
outside  expert to

<PAGE>
                                       12

evaluate the impact of this new  accounting  standard  and the expert  concluded
there was no impairment to goodwill.  However, the Company could be subject to a
determination  that its  goodwill is impaired in the future.  As of December 31,
2003, the Company had recorded goodwill of approximately $2.7 million.

DEREGULATION

      Several regulatory and judicial  proceedings have recently concluded,  are
underway or may soon be commenced that address issues  affecting  operations and
those of our competitors,  which may cause significant  changes to our industry.
We cannot predict the outcome of these developments,  nor can we assure you that
these changes will not have a material  adverse effect on us.  Historically,  we
have been a reseller of products and  services,  not a  manufacturer  or carrier
requiring  regulation of its  activities.  Pursuant to Minnesota  statutes,  our
Multiband  activity is specifically  exempt from the need to tariff our services
in multiple dwelling units (MDUs).  However, the  Telecommunications Act of 1996
provides  for  significant  deregulation  of  the  telecommunications  industry,
including  the  local  telecommunications  and  long-distance  industries.  This
federal  statute and the related  regulations  remain subject to judicial review
and additional rule-makings of the Federal Communications Commission,  making it
difficult  to  predict  what  effect  the  legislation  will  have  on  us,  our
operations, and our competitors.

DEPENDENCE ON STRATEGIC ALLIANCES

      Vicom  has a  distribution  agreement  with  NEC,  its  main  supplier  of
telecommunication  products,  which  expires June 30, 2004. An  interruption  or
substantial  modification of Vicom's  distribution  relationship  with NEC could
have a  material  adverse  effect on Vicom's  business,  operating  results  and
financial condition.

      In addition,  several suppliers,  or potential suppliers of Vicom, such as
McLeod, WorldCom, WS Net, XO Communications and others have filed for bankruptcy
in recent  years.  While the  financial  distress of its  suppliers or potential
suppliers  could  have a material  adverse  effect on  Vicom's  business,  Vicom
believes that enough  alternate  suppliers exist to allow the Company to execute
its business plans.

CHANGES IN TECHNOLOGY

      A  portion  of  our  projected  future  revenue  is  dependent  on  public
acceptance of broadband, and expanded satellite television services.  Acceptance
of these services is partially  dependent on the  infrastructure of the internet
and satellite  television  which is beyond Vicom's control.  In addition,  newer
technologies,  such as  video-on-demand,  are being developed which could have a
material adverse effect on the Company's  competitiveness  in the marketplace if
Vicom is unable to adopt or deploy such technologies.

ATTRACTION AND RETENTION OF EMPLOYEES

      Vicom's  success  depends  on the  continued  employment  of  certain  key
personnel,  including  executive  officers.  If Vicom were unable to continue to
attract and retain a sufficient number of qualified key personnel, its business,
operating  results and financial  condition  could be  materially  and adversely
affected.  In  addition,  Vicom's  success  depends on its  ability to  attract,
develop,  motivate and retain highly skilled and educated  professionals  with a
wide  variety of  management,  marketing,  selling and  technical  capabilities.
Competition  for such  personnel  is intense  and is expected to increase in the
future.

BUSINESS GROWTH AND SCALABILITY

      Vicom's  Multiband  subsidiary,  as of December  31, 2003,  was  providing
communications and entertainment services to thirty-seven MDUs primarily located
in  Minnesota,  North  Dakota,  Missouri  and  Florida.  Vicom  needs to provide
products and services to additional  MDUs if it is to become  profitable.

<PAGE>
                                       13

Vicom may need to go beyond its current geographic territory to increase its MDU
customers and attract additional financing.

      In  expanding  the  provision  of its  services  to  MDUs  in its  current
territories  and beyond,  Vicom needs to  successfully  overcome a number of the
factors  listed  above  such as  attracting  the  capital  to  finance  expanded
installations, obtaining additional technical staff for installation and support
in its present  markets and beyond;  and extending its key vendor  relationships
into other markets.

INTELLECTUAL PROPERTY RIGHTS

      Vicom relies on a combination  of trade secret,  copyright,  and trademark
laws,  license  agreements,   and  contractual  arrangements  with  certain  key
employees to protect its proprietary  rights and the proprietary rights of third
parties from which Vicom licenses  intellectual  property.  If it was determined
that Vicom infringed the  intellectual  property  rights of others,  it could be
required to pay substantial  damages or stop selling  products and services that
contain  the  infringing  intellectual  property,  which  could  have a material
adverse  effect  on  Vicom's  business,   financial  condition  and  results  of
operations.  Also, there can be no assurance that Vicom would be able to develop
non-infringing  technology  or that it could  obtain a license  on  commercially
reasonable  terms, or at all.  Vicom's success depends in part on its ability to
protect the  proprietary  and  confidential  aspects of its  technology  and the
products  and  services  it  sells.  There  can be no  assurance  that the legal
protections  afforded  to Vicom or the steps  taken by Vicom will be adequate to
prevent misappropriation of Vicom's intellectual property.

VARIABILITY OF QUARTERLY OPERATING RESULTS; SEASONALITY

      Variations in Vicom's revenues and operating results occur from quarter to
quarter  as a result  of a number of  factors,  including  customer  engagements
commenced  and  completed  during a quarter,  the number of  business  days in a
quarter,  employee  hiring and  utilization  rates,  the ability of customers to
terminate  engagements  without  penalty,  the size and scope of assignments and
general economic  conditions.  Because a significant portion of Vicom's expenses
are  relatively  fixed,  a variation  in the number of customer  projects or the
timing of the  initiation  or  completion  of projects  could cause  significant
fluctuations in operating  results from quarter to quarter.  Further,  Vicom has
historically experienced a seasonal fluctuation in its operating results, with a
larger  proportion of its revenues and  operating  income  occurring  during the
third quarter of the fiscal year.

CERTAIN ANTI-TAKEOVER EFFECTS

      Vicom is subject to Minnesota statutes  regulating  business  combinations
and  restricting  voting rights of certain  persons  acquiring  shares of Vicom.
These  anti-takeover  statutes may render more difficult or tend to discourage a
merger,  tender offer or proxy contest, the assumption of control by a holder of
a large block of Vicom's securities, or the removal of incumbent management.

VOLATILITY OF VICOM'S COMMON STOCK

      The  trading  price of our  common  stock  has been  and is  likely  to be
volatile.  The  stock  market  has  experienced  extreme  volatility,  and  this
volatility has often been  unrelated to the operating  performance of particular
companies.  We cannot be sure that an active  public market for our common stock
will continue after this offering.  Investors may not be able to sell the common
stock at or above the price they paid for their common stock,  or at all. Prices
for the common stock will be determined in the marketplace and may be influenced
by many  factors,  including  variations in our  financial  results,  changes in
earnings estimates by industry research analysts,  investors'  perceptions of us
and general economic, industry and market conditions.

<PAGE>
                                       14

FUTURE SALES OF OUR COMMON STOCK MAY LOWER OUR STOCK PRICE

      If our existing  shareholders  sell a large number of shares of our common
stock,  the market price of the common stock could  decline  significantly.  The
perception in the public market that our existing shareholders might sell shares
of common stock could depress our market price.

COMPETITION

      We face  competition  from others who are competing for a share of the MDU
market,  including other satellite companies and cable companies.  Some of these
companies have significantly greater assets and resources than we do.

FORWARD-LOOKING STATEMENTS

      This document  contains  forward-looking  statements within the meaning of
federal   securities  law.   Terminology   such  as  "may,"  "will,"   "expect,"
"anticipate,"  "believe,"  "estimate,"  "continue,"  "predict," or other similar
words,  identify  forward-looking  statements.  These statements  discuss future
expectations,  contain  projections  of results of  operations  or of  financial
condition or state other forward-looking information. Forward-looking statements
appear in a number of places in this prospectus and include statements regarding
our intent,  belief or current  expectation  about,  among other things,  trends
affecting  the  industries  in which we operate,  as well as the  industries  we
service,  and our business and growth  strategies.  Although we believe that the
expectations  reflected  in  these  forward-looking   statements  are  based  on
reasonable assumptions,  forward-looking statements are not guarantees of future
performance  and  involve  risks and  uncertainties.  Actual  results may differ
materially from those predicted in the forward-looking statements as a result of
various factors, including those set forth in "Risk Factors."

ITEM 2:

PROPERTIES

      Vicom and its  subsidiaries  lease principal  offices located at 2000 44th
Street SW, Fargo,  ND 58103 and 9449 Science Center Drive,  New Hope,  Minnesota
55428.  We have no foreign  operations.  The main Fargo office lease  expires in
2017 and covers  approximately  22,500  square feet.  The Fargo base rent ranges
from $23,565 to $30,377 per month. The New Hope office lease expires in 2013 and
covers  approximately  47,000  square  feet.  The New Hope base rent ranges from
$18,389 to $25,166 per month. Both the New Hope and Fargo leases have provisions
that call for the  tenants to pay net  operating  expenses,  including  property
taxes,  related to the  facilities.  Both  offices have  office,  warehouse  and
training facilities.

      Vicom considers its current facilities  adequate for its current needs and
believes that suitable additional space would be available as needed.

ITEM 3:

LEGAL PROCEEDINGS

      The  Company  is  involved  in legal  actions  in the  ordinary  course of
business. However, as of December 31, 2003, Vicom was not engaged in any pending
legal proceedings where, in the opinion of the Company, the outcome is likely to
have a  material  adverse  effect  upon  the  business,  operating  results  and
financial condition of the Company.

ITEM 4:

<PAGE>
                                       15

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      The Company did not submit  matters to a vote of security  holders  during
the last quarter of the fiscal year covered by this report.

<PAGE>
                                       16

PART II

ITEM 5:

MARKET FOR THE  REGISTRANT'S  COMMON  EQUITY,  RELATED  SHAREHOLDER  MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

      Through May 17,  2000,  Vicom's  common stock was traded and quoted on the
OTC Bulletin Board(R) ("OTCBB") under the symbol "VICM." From May 18, 2000 until
August 21,  2000,  the common stock was quoted under the VICM symbol on the Pink
Sheets(R)  operated by Pink Sheets LLC.  From August 21,  2000,  to December 12,
2000,  Vicom's  common  stock was traded and quoted on the OTCBB  under the VICM
symbol.  Since then, the stock has been traded and quoted on the Nasdaq Smallcap
market  system.  The table  below sets forth the high and low bid prices for the
common stock  during each  quarter in the two years ended  December 31, 2002 and
December 31, 2003 as provided by Nasdaq.

                QUARTER ENDED                          HIGH BID          LOW BID
                -------------                          --------          -------
March 31, 2002 .............................             1.90              1.37
June 30, 2002 ..............................             1.75               .80
September 30, 2002 .........................              .92               .52
December 31, 2002 ..........................             1.12               .50
March 31, 2003 .............................             1.37               .77
June 30, 2003 ..............................             2.49              1.03
September 30, 2003 .........................             2.20              1.52
December 31, 2003 ..........................             1.85              1.23


      As of March 15, 2004,  Vicom had 679  shareholders of record of its common
stock and 19,533,138 shares of common stock outstanding.  As of that date, eight
shareholders held a total of 27,931 of Class A Preferred,  two shareholders held
8,700 shares of Class B  Preferred,  five  shareholders  held a total of 125,400
shares  of Class C  Preferred,  and  eight  shareholders  held a total of 77,650
shares of Class E Preferred.

RECENT SALES OF UNREGISTERED SECURITIES

      The Company in 2003 issued  $828,172  worth of its common stock to Pyramid
Trading LP in connection with conversion of a note payable and accrued interest.
The common stock was issued at various prices  pursuant to a formula tied to the
trading price of the Company's common stock.

      The Company,  during 2003, issued $25,000 worth of Class B Preferred Stock
and $76,500 worth of Class E Preferred  Stock to various  accredited  investors.
The Company also issued  $72,000  worth of Class C Preferred  Stock to a related
party.

      At various other times in 2003, the Company,  via conversions of preferred
stock or investor  purchases of common  stock,  issued  common shares at various
prices,  netting  proceeds  of  $4,023,704.  All sales  were made to  accredited
investors.

      In  connection   with  these  sales,  we  relied  on  the  exemption  from
registration  provided by Sections 4(2) and 4(6) of the  Securities Act of 1933,
as well as Rule 506 of  Regulation D based on (i) our belief that the  issuances
did not involve a public offering,  (ii) the transactions involved fewer than 35
purchasers,  and (iii) because we had a reasonable basis to believe that each of
the shareholders  were either  accredited or otherwise had sufficient  knowledge
and  sophistication,  either  alone  or  with  a  purchaser  representative,  to
appreciate and evaluate the risks and merits  associated  with their  investment
decision.

<PAGE>
                                       17

COMMON STOCK

      Holders of common  stock are entitled to one vote per share in all matters
to be voted upon by shareholders. There is no cumulative voting for the election
of directors,  which means that the holders of shares  entitled to exercise more
than 50% of the voting rights in the election of directors are able to elect all
of the directors.  Vicom's Articles of Incorporation provide that holders of the
Company's  common stock do not have  preemptive  rights to subscribe  for and to
purchase additional shares of common stock or other obligations convertible into
shares of common stock which may be issued by the Company.

      Holders of common  stock are  entitled to receive  such  dividends  as are
declared by Vicom's Board of Directors  out of funds  legally  available for the
payment of dividends.  Vicom  presently  intends not to pay any dividends on the
common stock for the  foreseeable  future.  Any future  determination  as to the
declaration and payment of dividends will be made at the discretion of the Board
of  Directors.  In the event of any  liquidation,  dissolution  or winding up of
Vicom,  and  subject to the  preferential  rights of the  holders of the Class A
Preferred,  Class B Preferred,  Class C Preferred, Class D Preferred and Class E
Preferred,  the  holders of common  stock will be entitled to receive a pro rata
share of the net  assets of Vicom  remaining  after  payment  or  provision  for
payment of the debts and other liabilities of Vicom.

      All of  the  outstanding  shares  of  common  stock  are  fully  paid  and
non-assessable.  Holders of common  stock of Vicom are not  liable  for  further
calls or assessments.

      The  Company's  Board of Directors  has not declared any  dividends on our
common  stock  since  our  inception,  and does not  intend  to pay out any cash
dividends on our common stock in the foreseeable  future. We presently intend to
retain all  earnings,  if any, to provide  for our  growth.  The payment of cash
dividends  in the  future,  if any,  will be at the  discretion  of the Board of
Directors  and will  depend  upon  such  factors  as  earnings  levels,  capital
requirements,  our financial  condition and other factors deemed relevant by our
Board of Directors.

PREFERRED STOCK

      In December  1998,  Vicom  issued  2,550  shares of Class A Preferred  for
$23,638  and  37,550  shares  of Class B  Preferred  for  $359,893.  The Class B
Preferred was offered to certain note holders at a conversion rate of $10.00 per
share  of  Class B  Preferred.  Each  share of  Class A  Preferred  and  Class B
Preferred is non-voting  (except as otherwise  required by law) and  convertible
into  five  shares  of  common   stock,   subject  to   adjustment   in  certain
circumstances.  Each holder of a share of Class A Preferred or Class B Preferred
has a  five-year  warrant  to  purchase  one share of common  stock at $3.00 per
share, subject to adjustment. During 2001, Vicom issued 67,655 shares of Class A
Preferred for $676,556.

      In June  2000,  Vicom  issued  80,500  shares  of  Class C  Preferred  for
$805,000.  The Class C  Preferred  was  offered  to  certain  note  holders at a
conversion rate of $10.00 a share. In September 2000, Vicom issued an additional
72,810 shares of Class C Preferred for $728,100. Each share of Class C Preferred
is non-voting  (except as otherwise  required by law) and  convertible  into two
shares of Vicom common stock, subject to adjustment in certain circumstances.

      In November  2000,  Vicom issued  72,500  shares of Class D Preferred  for
$490,332. The Class D Preferred was sold to eight accredited investors at $10.00
per share.  Each share of Class D Preferred is  non-voting  (except as otherwise
required by law) and  convertible  into two and one-half  shares of Vicom Common
Stock, subject to adjustment in certain circumstances.

      In the second  quarter of 2002,  Preferred  Class D stocks were  redeemed;
$100,000 converted to Common Stock, and $300,000 converted to a Note Payable.



<PAGE>
                                       18

      In the  fourth  quarter of 2002,  Vicom  issued  70,000  shares of Class E
Preferred  for $700,000,  with $600,000  related to conversion of a note payable
from a director of the Company into Preferred Stock.

      In the first quarter of 2003, $72,000 worth of Class C Preferred Stock was
issued to an officer of the Company in a conversion of accounts payable. Also in
the first quarter of 2003,  $76,500 worth of Class E Preferred  Stock was issued
to a member of the Board for his purchase of Multiband assets.

      In the third quarter of 2003 $25,000 worth of Class B Preferred  Stock was
purchased by an accredited investor.

      In addition,  during 2003  $133,100  worth of Class C Preferred  Stock was
redeemed.

      The  holders  of the  Class  A  Preferred,  Class  B  Preferred,  Class  C
Preferred,  Class D Preferred  and Class E Preferred  (collectively,  "Preferred
Stock") are entitled to receive,  as and when declared by the Board,  out of the
assets of the Company  legally  available for payment  thereof,  cumulative cash
dividends calculated based on the $10.00 per share stated value of the Preferred
Stock.  The per  annum  dividend  rate is eight  percent  (8%)  for the  Class A
Preferred and ten percent (10%) for the Class B Preferred and Class C Preferred,
fourteen  percent (14%) for the Class D Preferred  and fifteen  percent (15%) in
the Class E Preferred,  to be paid in kind.  Dividends on the Class A Preferred,
Class C Preferred and Class D Preferred are payable  quarterly on March 31, June
30,  September  30,  and  December  31 of each  year.  Dividends  on the Class B
Preferred are payable monthly on the first day of each calendar month. Dividends
on the Preferred Stock accrue  cumulatively on a daily basis until the Preferred
Stock is redeemed or converted.

      In the event of any  liquidation,  dissolution or winding up of Vicom, the
holders of the Class A  Preferred  and Class B  Preferred  will be  entitled  to
receive a  liquidation  preference  of $10.50 per share,  and the holders of the
Class C Preferred,  Class D Preferred and Class E Preferred  will be entitled to
receive  a  liquidation   preference  of  $10.00  per  share,  each  subject  to
adjustment. Any liquidation preference shall be payable out of any net assets of
Vicom  remaining  after  payment or provision for payment of the debts and other
liabilities of Vicom.

      Vicom may redeem the Preferred Stock, in whole or in part, at a redemption
price of $10.50 per share for the Class A  Preferred  and the Class B  Preferred
and $10.00 per share for the Class C  Preferred,  Class D Preferred  and Class E
Preferred  (subject to adjustment,  plus any earned and unpaid dividends) on not
less than thirty days' notice to the holders of the  Preferred  Stock,  provided
that the closing bid price of the common stock exceeds $4.00 per share  (subject
to adjustment) for any ten consecutive  trading days prior to such notice.  Upon
Vicom's  call for  redemption,  the holders of the  Preferred  Stock  called for
redemption  will have the option to convert each share of  Preferred  Stock into
shares  of  common  stock  until the  close of  business  on the date  fixed for
redemption, unless extended by Vicom in its sole discretion. Preferred Stock not
so converted will be redeemed. No holder of Preferred Stock can require Vicom to
redeem his or her shares.

ITEM 6:

SELECTED CONSOLIDATED FINANCIAL DATA

      The following  selected  financial data should be read in conjunction with
our consolidated  financial statements including the accompanying notes and with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations".  The data for each of the  fiscal  years in the three  year  period
ended  December 31, 2003,  have been  derived  from our  consolidated  financial
statements and accompanying notes contained in this prospectus. The Statement of

<PAGE>
                                       19

Operations  Data for the year ended  December  31, 2000 and 1999 and the Balance
Sheet  data at  December  31,  2001,  2000 and 1999 have been  derived  from our
audited  consolidated  financial  statements  which  are not  contained  in this
filing.

<TABLE>
<CAPTION>

STATEMENT OF OPERATIONS DATA       2003             2002              2001              2000            1999
----------------------------       ----             ----              ----              ----            ----


<S>                                       <C>                <C>                <C>                <C>                <C>
Revenues ............................     $ 22,640,421       $ 24,540,969       $ 32,260,777       $ 39,781,846       $ 20,388,870
Cost of products and
   services .........................     $ 15,952,019       $ 18,036,750       $ 25,295,186       $ 31,698,569       $ 16,247,898
Gross profit ........................     $  6,688,402       $  6,504,219       $  6,965,591       $  8,083,277       $  4,140,972
% of revenues .......................             29.5%              26.5%              21.6%              20.3%              20.3%

Selling, general and
   administrative expenses ..........     $ 10,184,709       $  9,337,292       $ 10,962,739       $ 11,852,041       $  5,823,945
% of revenues .......................             45.0%              38.0%              34.0%              29.8%              28.6%
Loss from Operations ................     $ (3,496,307)      $ (2,833,073)      $ (3,997,148)      $ (3,768,764)      $ (1,682,973)
Other expense net ...................     $   (902,063)      $ (1,604,986)      $ (1,328,404)      $   (458,067)      $   (139,461)
Minority interest in
   subsidiary .......................                          $33,366 $0       $          0       $          0       $          0
Loss before income taxes ............     $ (4,365,004)      $ (4,438,059)      $ (5,325,552)      $ (4,226,831)      $ (1,822,434)
Income tax provision ................     $          0       $          0       $          0       $      9,000       $    241,200
Net Loss ............................     $ (4,365,004)      $ (4,438,059)      $ (5,325,552)      $ (4,235,831)      $ (2,063,634)

Loss attributable to common
   stockholders .....................     $ (4,613,693)      $ (4,591,637)      $ (5,758,221)      $ (5,082,011)      $ (2,101,603)

Loss per common share-basic
   and diluted ......................     $       (.29)      $       (.39)      $       (.66)      $      (0.72)      $      (0.55)
Weighted average shares
   outstanding ......................       16,112,231         11,735,095          8,762,814          7,009,751          3,821,978


BALANCE SHEET DATA                                2003               2002               2001               2000               1999
-------------------------------------     ------------       ------------       ------------       ------------       ------------

Working capital
   (deficiency) .....................     $  1,118,792       $   (252,870)      $    426,549       $  2,870,114       $ (2,882,907)
Total assets ........................     $ 13,902,885       $ 10,347,316       $ 12,209,681       $ 15,614,573       $ 12,598,745
Long-term debt ......................     $  2,262,891       $  3,273,350       $  3,311,870       $  3,362,083       $    926,821
Stockholders' equity ................     $  5,807,711       $  2,642,285       $  4,184,001       $  5,876,352       $  1,026,344
</TABLE>


ITEM 7:

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATION

      The  following  discussion  of the  financial  condition  and  results  of
operations  of  Vicom,  Incorporated  should  be read in  conjunction  with  the
Condensed  Consolidated  Financial  Statements  and the Notes  thereto  included
elsewhere in this report.

<PAGE>
                                       20

YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002

RESULTS OF OPERATIONS

      The   following   table  sets  forth  certain  items  from  the  Company's
consolidated  statements  of  operations  expressed  as a  percentage  of  total
revenue.

                                   2003         2002
Revenues
Vicom                               0%           0%
MBS                               93.63%       97.65%
MCS                                6.37%        2.35%
                                   -----        -----
                Total Revenues    100.0%       100.0%
                                  ======       ======
Cost of Sales
Vicom                               0%           0%
MBS                               66.55%       71.89%
MCS                                3.91%        1.61%
                                   -----        -----
Total Cost of Sales               70.46%       73.50%
                                  ======       ======
Gross Margin                      29.54%        26.5%
Selling, General and
Administrative expenses           44.98%       37.39%
Operating Loss                   (15.44%)     (11.34%)
Net Loss                         (19.28%)     (17.78%)

REVENUES

      Total revenues  decreased 7.7% to $22,640,421 in 2003 from  $24,540,969 in
2002.

      Revenues  from the MBS segment  which  traditionally  sells  telephone and
computer  technologies  products and services  decreased 11.5% to $21,199,303 in
2003 from  $23,963,748 in 2002. This decrease in MBS segment  revenues  resulted
primarily  from  weaker  economic  conditions  in 2003 and from MBS's  desire to
increase gross margins versus  maintaining top line revenues.  MBS is increasing
margins by focusing more on sales of services versus sales of product.

      Vicom segment had no revenues.

      Revenues from MCS increased  149.7% to $1,441,118 in 2003 from $577,221 in
2002.  This  increase  is due to the  expansion  of  MCS  services  to  nineteen
apartment properties and eighteen timeshare properties.

GROSS MARGIN

      The  Company's  gross  margin was  $6,688,402  for 2003,  as  compared  to
$6,504,219  for  2002.  The  increase  of 2.8% in 2003 was  primarily  due to an
increase in consumer  recurring  revenues  comprising  a greater  percentage  of
overall revenues. For 2003, gross margin, as a percentage of total revenues, was
29.5% versus 26.5% for 2002.  The Company  expects  gross margins to maintain or
even slightly increase in future periods as recurring  revenues become a greater
percentage of the Company's overall revenue mix.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling, general and administrative expenses increased 9.1% to $10,184,709
in 2003,  compared to $9,337,292 in 2002. This increase in expenses is primarily
related to  increased  payroll  and  facility  expense  and costs  incurred  for

<PAGE>
                                       21

re-branding Vicom operating divisions as Multiband.  Increased payroll primarily
resulted  from  acquisition  related  payroll  expense  and  increase in officer
compensation in 2003.  Selling,  general and administrative  expenses were, as a
percentage of revenues,  45.0% for 2003 and 38.0% for 2002. The Company  expects
these  expenses to remain  stable or even  slightly  decrease as a percentage of
revenues in 2004.

INTEREST EXPENSE

      Interest  expense  was  $897,704  for  2003,  versus  $1,604,512  for 2002
reflecting a substantial  decrease in Original Issue Discount expense associated
with  long  term  debt  and a  significant  decrease  in cash  interest  expense
associated with notes payable.

NET LOSS

      In 2003, the Company  incurred a net loss of $4,365,004  compared to a net
loss of $4,438,059 for 2002.

YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001

RESULTS OF OPERATIONS

      The   following   table  sets  forth  certain  items  from  the  Company's
consolidated  statements  of  operations  expressed  as a  percentage  of  total
revenue.

                                   2002         2001
Revenues
Vicom and VMTS                      0%           0%
MBS                               97.65%        99.2%
MCS                                2.35%         .78%
                                   -----        ----
Total Revenues                    100.0%       100.0%
                                  ======       ======
Cost of Sales
Vicom and VMTS                      0%           .02%
MBS                               71.89%       77.39%
MCS                                1.61%         .69%
                                   -----        ----
Total Cost of Sales               73.50%       78.10%
                                  ======       ======
Gross Margin                       26.5%       21.88%
Selling, General and
Administrative expenses           37.39%       34.45%
Operating Loss                   (11.34%)     (12.56%)
Net Income Loss                  (17.78%)     (16.73%)

REVENUES

      Total revenues  decreased 23.9% to $24,540,969 in 2002 from $32,260,777 in
2001.

      Revenues  from  the  MBS  segment  which   traditionally   sells  computer
technologies  products and services  decreased 25.1% to $23,963,748 in 2002 from
$31,994,781 in 2001. This decrease in MBS segment  revenues  resulted  primarily
from weaker economic  conditions in 2002 and from MBS's desire to increase gross
margins versus maintaining top line revenues.

      Vicom segment had no revenues.

      Revenues from  MultiBand  increased 131% to $577,221 in 2002 from $249,590
in 2001.  This  increase is due to the  expansion of  Multiband  services to ten
properties.

<PAGE>
                                       22

GROSS MARGIN

      The  Company's  gross  margin was  $6,504,219  for 2002,  as  compared  to
$6,965,591 for 2001.  The decrease of 6.6% in 2002 was due to reduced  revenues.
For 2002,  gross margin,  as a percentage of total  revenues,  was 26.50% versus
21.5% for 2001.  This  increase in gross margin  revenues is primarily due to an
increase  in sale of  services  constituting  a greater  percentage  of  overall
revenues than in the prior year. As the Company  continues to strive for bundled
sales of services,  and bundled  sales of equipment  and  services,  the Company
anticipates that it will maintain its gross margin percentages in fiscal 2003.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling,   general  and   administrative   expenses  decreased  14.83%  to
$9,337,292 in 2002,  compared to $10,962,739 in 2001.  This decrease in expenses
is primarily  related to reductions in payroll,  benefits and vehicle  expenses.
Selling,  general and administrative expenses were, as a percentage of revenues,
38.0% for 2002 and 33.9% for 2001.

INTEREST EXPENSE

      Interest  expense was  $1,604,512  for 2002,  versus  $1,446,868  for 2001
reflecting  an increase in debt due to capital  raising  efforts,  valuation  of
warrants  issued with  Preferred  Stock and  convertible  notes,  and additional
borrowings.

NET LOSS

      In 2002, the Company  incurred a net loss of $4,438,059  compared to a net
loss of  $5,325,552  for 2001.  The decrease in net loss is  primarily  due to a
significant  reduction in payroll and benefit  related  expenses  from the prior
year.

<PAGE>
                                       23

UNAUDITED QUARTERLY RESULTS

      The  following  table sets forth  certain  unaudited  quarterly  operating
information  for  each of the  eight  quarters  in the  two-year  period  ending
December 31, 2003. This data includes, in the opinion of management,  all normal
recurring adjustments necessary for the fair presentation of the information for
the periods  presented when read in conjunction with the Company's  consolidated
financial statements and related notes thereto.  Results for any previous fiscal
quarter are not  necessarily  indicative of results for the full year or for any
future quarter. The Company has historically  experienced a seasonal fluctuation
in its operating results,  with a larger proportion of its revenues in the third
quarter of the fiscal year.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                      Dec. 31,    Sept. 30,     June 30,    March 31,      Dec. 31,      Sept. 30,     June 30,       March 31,
                        2003        2003          2003        2003           2002           2002         2002           2002
--------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>          <C>          <C>           <C>            <C>           <C>            <C>
Revenues:
--------------------------------------------------------------------------------------------------------------------------------
Vicom                        0            0            0            0             0              0             0              0
--------------------------------------------------------------------------------------------------------------------------------
MBS                  4,367,773    5,864,468    5,330,420    5,636,642     5,758,953      6,227,683     5,815,531      6,161,581
--------------------------------------------------------------------------------------------------------------------------------
MCS                    429,140      418,897      357,961      235,120       192,771        154,950       128,893        100,607
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Total
Revenues             4,796,913    6,283,365    5,688,381    5,871,762     5,951,724      6,382,633     5,944,424      6,262,188
--------------------------------------------------------------------------------------------------------------------------------
Cost of Sales        3,233,068    4,493,829    3,914,420    4,310,702     4,212,240      4,680,582     4,354,714      4,789,214
--------------------------------------------------------------------------------------------------------------------------------
Gross Margin         1,563,845    1,789,536    1,773,961    1,561,060     1,739,484      1,702,051     1,589,710      1,472,974
--------------------------------------------------------------------------------------------------------------------------------
SG&A
Expense              3,036,745    2,409,227    2,502,741    2,235,996     2,484,108      2,376,225     2,240,223      2,236,736
--------------------------------------------------------------------------------------------------------------------------------
Operating
Loss               (1,472,900)     (619,691)    (728,780)    (674,936)     (744,624)      (674,174)     (650,513)      (763,762)
--------------------------------------------------------------------------------------------------------------------------------
Interest
Expense              (249,336)     (202,958)    (219,723)    (225,687)     (462,420)      (349,388)     (426,869)      (365,835)
--------------------------------------------------------------------------------------------------------------------------------
Other Income
(Expenses)              52,418       (6,513)      15,232      (65,496)       47,740        (93,171)       25,281         19,676
--------------------------------------------------------------------------------------------------------------------------------
Minority
Interest                38,219       (3,460)      (1,393)
--------------------------------------------------------------------------------------------------------------------------------
Net Loss
Before Taxes        (1,631,599)     (832,622)   (934,664)    (966,119)   (1,159,304)    (1,116,733)   (1,052,101)    (1,109,921)
--------------------------------------------------------------------------------------------------------------------------------
Income Tax
(Benefit)
Provision                    0            0            0            0             0              0             0              0
--------------------------------------------------------------------------------------------------------------------------------
Net Loss            (1,631,599)    (832,622)    (934,664)    (966,119)   (1,159,304)    (1,116,733)   (1,052,101)    (1,109,921)
--------------------------------------------------------------------------------------------------------------------------------
Loss Per
Common
Share Basic
and Diluted               (.10)        (.05)        (.06)        (.08)         (.11)          (.09)         (.09)          (.10)
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
a
LIQUIDITY AND CAPITAL RESOURCES

YEAR ENDED DECEMBER 31, 2003

      Available  working capital for 2003 increased  $1,3771,662  primarily to a
stronger cash position due to investing activities. Vicom successfully completed
an offering of  institutional  financing  in the second half of 2003 raising net
proceeds of $2,223,150.  Vicom had a decrease of $289,890 in accounts receivable
as a result of a reduction in sales.  Current  liabilities  increased in 2003 by
$1,373,968 as a result of higher  current  portion of long term debt and accrued
liabilities.  Inventories  increased  by  $509,762  primarily  due to a  planned
expansion to provide wireless intranet service.

      Total long term debt and capital lease obligation  decreased by $1,010,459
during the year ended  December  31,  2003.  Vicom paid out  $75,301  related to
capital lease obligations and $200,768 related to long term debt during the year
ended December 31, 2003 versus $1,069,433 paid out in 2002.

      The  Company  used  $526,936  for capital  expenditures  during  2003,  as
compared to  $1,275,434  in 2002.  The decrease was  primarily  attributed  to a
reduction in self-financed  MCS construction.  In 2004

<PAGE>
                                       24

capital  expenditures  are  expected  to be  limited to the  Company's  internal
information  technology  infrastructure  and are  expected  to be less than 2003
expenditures.

      In 2003,  the  Company  reached  an  agreement  to convert  the  remaining
$962,000 of a Note  Payable to equity.  Terms of the  conversion  state the note
will be  converted  to  equity  over a 14  month  period  at a  price  generally
equivalent to a 10% discount to market price.

      In  November  of  2003,  the  Company  borrowed  $1,500,000  and  issued a
three-year  warrant to the lender to purchase 535,000 common shares at $2.21 per
share through  November 2006. The debt is also  convertible into common stock of
the Company at a conversion rate of $1.40 per share through November 2006.

      On June 30, 2003, the Company borrowed  $124,000 as an unsecured note from
a  stockholder  of the Company,  with monthly  payments of $5,600 at an interest
rate of 7.85%.

      Net cash used by  operations  in 2003 was  $2,580,248  as compared to cash
used by operations  in 2002 of $869,721.  The cash used by operations in 2003 is
due primarily to net operating  losses and a reduction in the wholesale  line of
credit.  During the years ended  December 31, 2003,  and December 31, 2002,  the
Company incurred  significant net losses.  Although the majority of these losses
were due to non-cash expenses,  The Company still continued to incur cash losses
as  well  due  to  general  corporate  expense.  The  on-going  addition  of MCS
properties in the Company's portfolio provided additional cash flows in 2003 and
those cash flows are  projected to improve in 2004 with  additional  expansions.
Management of Vicom believes that, for the near future,  cash generated from new
investments  combined with existing  credit  facilities are adequate to meet the
anticipated   liquidity  in  capital  resource  requirements  of  its  business,
contingent upon Company operating results for the next twelve months.

YEAR ENDED DECEMBER 31, 2002

      Available working capital, for 2002, decreased $679,419 due to Vicom's net
operating loss and net cash used in operating  activities of $869,721.  Proceeds
from issuance of long term debt, stock and warrants  totaling  $2,121,597 helped
offset Vicom's net operating  loss.  Vicom had a decrease of $38,344 in accounts
payable and other  current  liabilities  for 2002  versus  last  year's  period,
primarily due to significant  reductions in accounts receivables which were used
to reduce payables.

      Inventories  year to date  decreased  net of reserves  $182,783  over last
year's  prior   period   inventories   due  to  a  decrease  in  revenues.   The
aforementioned  decrease  in  revenues  also  led  to  a  decrease  in  accounts
receivable net of reserves of $576,509.

      Total long term debt and capital  lease  obligation  decreased by $102,631
during the year ended December 31, 2002.  The Company paid out $937,828  related
to capital lease  obligations and $131,605  related to long term debt during the
year ended December 31, 2002 versus $777,578 paid out in 2001.

      In 2001, the Company entered into a long-term debt agreement,  expiring in
2003,  with an  investment  fund.  The fund,  in exchange  for its $1.5  million
investment,  also  received  375,000  warrants  and the  right  to  convert  its
investment  into Vicom  common  stock at a  predetermined  price.  The effect of
recording the beneficial  conversion  feature and warrants  associated  with the
convertible loan resulted in a $1,500,000 discount  attributable to the warrants
in accordance with the Black-Scholes pricing model. The Company is expensing the
aforementioned  warrant  discount in eight quarterly  installments  over the two
year  term of the  loan.  $460,000  of the debt was  converted  to stock in 2002
pursuant to a formula tied to the trading price of the Company's Common Stock.


<PAGE>
                                       25

      In 2002, the Company  borrowed  $600,000 from a Director.  This investment
was later  converted  into Class E Preferred  Stock.  Also in 2002,  the Company
restructured  its  debenture  with  Convergent  Capital,  resetting  the date of
principal repayment to begin in August 2005.

      The Company used  $1,275,434  for capital  expenditures  during  2002,  as
compared to  $1,884,945  in 2001.  The decrease was  primarily  attributed  to a
reduction in self-financed MCS construction.

      In  2002,  the  Company  extinguished  $937,828  worth  of  capital  lease
obligations,  reduced its principal  indebtedness $460,000 to a note holder, and
converted  another  $600,000 worth of debt to Preferred Stock. All these events,
combined, with the aforementioned refinancing and delayed principal repayment to
its  largest  debt  holder,  should  materially  improve  projected  cash  flows
throughout 2003 provided Company operating losses continue to diminish.

      Net cash used by operations was approximately  $869,721 in 2002 versus net
cash used by operations of $502,110 in 2001. The cash used by operations in 2002
is due primarily to net operating losses, and reductions in accounts payable and
wholesale line of credit balances in that year.  During the years ended December
31, 2002 and December 31, 2001,  the Company  incurred  significant  net losses.
Although the majority of these losses were due to non-cash expenses, the Company
still  continued to incur cash losses as well due to general  corporate  expense
and  continuing  expenses  related to the building  out of its MCS network.  The
Company  in 2002  significantly  cut its  selling,  general  and  administrative
expenses which led to a material decrease in cash losses.  The on-going addition
of MCS  properties in the Company's  portfolio also  generated  additional  cash
flows in 2002 and these MCS cash flows are projected to improve  meaningfully in
2003.  Management of Vicom believes  that,  for the near future,  cash generated
from new investments  combined with existing  credit  facilities are adequate to
meet the anticipated liquidity in capital resource requirements of its business,
contingent upon Company operating results for the next twelve months.

CRITICAL ACCOUNTING POLICIES

Impairment of Long-Lived Assets

The  Company's  long-lived  assets  include  property,  equipment  and leasehold
improvement. At December 31, 2003, the Company had net property and equipment of
$3,589,704,  which represents  approximately  26% of the Company's total assets.
The estimated  fair value of these assets is dependent on the  Company's  future
performance. In assessing for potential impairment for these assets, the Company
considers  future  performance.  If these forecasts are not met, the Company may
have to record an  impairment  charge not  previously  recognized,  which may be
material.  In 2003,  the  Company  did not  record any  impairment.  In 2002 the
Company recorded impairment of $119,480 on property, plant and equipment. During
the year ended  December  31,  2001,  the Company did not record any  impairment
losses related to long-lived assets.

Impairment of Goodwill

We  periodically   evaluate   acquired   businesses  for  potential   impairment
indicators.  Our judgments regarding the existence of impairment  indicators are
based on legal factors,  market  conditions and  operational  performance of our
acquired  businesses.  Future events could cause us to conclude that  impairment
indicators  exist and that  goodwill  associated  with our acquired  businesses,
which  amounts to  $2,748,879  (or 20% of total  assets),  may be impaired.  Any
resulting  impairment loss could have a material adverse impact on our financial
condition and results of  operations.  During the years ended December 31, 2003,
2002 and 2001,  the  Company  did not record any  impairment  losses  related to
goodwill.

<PAGE>
                                       26

Inventories

We value our inventory at the lower of the actual cost or the current  estimated
market value of the inventory.  We regularly review inventory quantities on hand
and record a provision for excess and obsolete  inventory.  Rapid  technological
change,  frequent new product  development,  and rapid product obsolescence that
could result in an increase in the amount of obsolete  inventory  quantities  on
hand characterize our industry.

Recent Accounting Pronouncements

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging Activities," effective for contracts entered
into or modified after June 30, 2003.  This amendment  clarifies when a contract
meets the characteristics of a derivative,  clarifies when a derivative contains
a financing  component and amends  certain other  existing  pronouncements.  The
adoption  of SFAS  No.  149 did not  have a  material  effect  on the  Company's
consolidated financial statements

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
lnstruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
is effective for financial  instruments  entered into or modified  after May 31,
2003,  and otherwise is effective at the  beginning of the first interim  period
beginning  after June 15, 2003.  SFAS No. 150 requires the  classification  as a
liability of any financial  instruments with a mandatory  redemption feature, an
obligation to repurchase equity shares, or a conditional obligation based on the
issuance of a variable  number of its equity  shares.  The Company does not have
any financial  instruments  as defined by SFAS No. 150. The adoption of SFAS No.
150 did not have a  material  effect  on the  Company's  consolidated  financial
statements.

In  November  2002,  the FASB issued FASB  Interpretation  No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of   Indebtedness   of  Others"  (FIN  45).  FIN  45  clarifies  the
requirements  for  a  guarantor's  accounting  for  and  disclosure  of  certain
guarantees  issued  and  outstanding.   The  initial   recognition  and  initial
measurement provisions of FIN 45 are applicable to guarantees issued or modified
after December 31, 2002. The disclosure requirements of FIN 45 are effective for
financial statements for periods ending after December 15, 2002. The adoption of
FIN 45 did not effect the Company's consolidated financial statements.

In December 2003, the Financial  Accounting  Standards  Board (FASB) issued FASB
Interpretation  No. 46  (Revised  December  2003),  "Consolidation  of  Variable
Interest  Entities,  an  Interpretation  of ARB No. 51" (FIN 46R). This standard
replaces FIN 46, Consolidation of Variable Interest Entities" that was issued in
January 2003.  FIN 46R modifies or clarifies  various  provisions of FIN 46. FIN
46R addresses the  consolidation  of business  enterprises of variable  interest
entities  (VIEs),  as defined by FIN 46R. FIN 46R exempts certain  entities from
its requirements and provides for special effective dates for entities that have
fully or  partially  applied  FIN 46 prior to  issuance  of FIN 46R.  Otherwise,
application  of FIN 46R is required in financial  statements of public  entities
that have  interest  in  structures  commonly  referred  to as  special  purpose
entities for periods ending after December 15, 2003.  Application by the Company
for all other  types of VIEs is  required in  financial  statements  for periods
ending no later than the quarter  ended  January 31, 2005.  The Company does not
expect  the  adoption  of FIN 46R to have a  material  effect  on the  Company's
consolidated financial statements

<PAGE>
                                       27

DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

      The following summarizes our contractual obligations at December 31, 2003,
and  the  effect  these  contractual  obligations  are  expected  to have on our
liquidity and cash flows in future periods (in thousands):

<TABLE>
<CAPTION>
                                   Total       1 Year of Less     1-3 Years      Over 3 Years
                              ---------------  ---------------  --------------  ---------------
<S>                                <C>                <C>           <C>              <C>
Operating Leases                   $7,199,000         $534,000      $1,569,000       $5,096,000
Capital Leases                        230,179           69,556         160,623        ---------
Long Term Debt                      4,786,877          998,813       3,602,829          185,235
Wholesale Line of Credit              976,314         $976,314       ---------        ---------
                              ---------------  ---------------  --------------  ---------------
Total                             $13,192,370       $2,578,683      $5,332,452       $5,281,235
                              ===============  ===============  ==============  ===============
</TABLE>

FORWARD LOOKING STATEMENTS

      From time to time,  the  Company may  publish  forward-looking  statements
relating  to  such  matters  as  anticipated  financial  performance,   business
prospects,  technological  developments,  new products, and similar matters. The
Private  Securities  Litigation  Reform Act of 1995  provides a safe  harbor for
forward-looking  statements  including those made in this document.  In order to
comply  with the terms of the Private  Securities  Litigation  Reform  Act,  the
Company notes that a variety of factors could cause the Company's actual results
and  experience  to differ  materially  from the  anticipated  results  or other
expectations expressed in the Company's  forward-looking  statements.  The risks
and uncertainties that may affect the operations, performance,  developments and
results of the Company's  business include the following:  national and regional
economic  conditions;  pending  and  future  legislation  affecting  the  IT and
telecommunications industry; stability of foreign governments; market acceptance
of the Company's  products and  services;  the  Company's  continued  ability to
provide integrated  communication solutions for customers in a dynamic industry;
and other competitive factors.  Because these and other factors could affect the
Company's operating results,  past financial  performance should not necessarily
be  considered  as a reliable  indicator of future  performance,  and  investors
should not use historical trends to anticipate future period results.

<PAGE>
                                       28

ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      Vicom is not  subject to any  material  interest  rate risk as any current
lending  agreements are at a fixed rate of interest  except for the note payable
to Laurus  Master Fund,  Ltd.,  which is three  percent over the prime  interest
rate.

ITEM 8.

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



<PAGE>

                      VICOM, INCORPORATED AND SUBSIDIARIES

                               New Hope, Minnesota

                           December 31, 2003 and 2002






                        CONSOLIDATED FINANCIAL STATEMENTS

                    Including Report of Independent Auditors






<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                                TABLE OF CONTENTS



REPORT OF INDEPENDENT AUDITORS                                         1

FINANCIAL STATEMENTS

    Consolidated Balance Sheets                                        2

    Consolidated Statements of Operations                              3

    Consolidated Statements of Stockholders' Equity                4 - 9

    Consolidated Statements of Cash Flows                             10

    Notes to Consolidated Financial Statements                   11 - 34

SUPPLEMENTAL INFORMATION

    Report of Independent Auditors on Supplementary Information       35

    Valuation and Qualifying Accounts                                 36


<PAGE>


                         REPORT OF INDEPENDENT AUDITORS




To Stockholders, Board of Directors, and Audit Committee
Vicom, Incorporated and subsidiaries

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Vicom,
Incorporated  and subsidiaries as of December 31, 2003 and 2002, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each  of  the  three  years  in  the  period  ended  December  31,  2003.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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.  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 financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Vicom,
Incorporated  and subsidiaries as of December 31, 2003 and 2002, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period  ended  December 31,  2003,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

                                              /s/ VIRCHOW, KRAUSE & COMPANY, LLP



Minneapolis, Minnesota
February  16, 2004



                                                                          Page 1

<PAGE>

                      VICOM, INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2003 and 2002
                                     ASSETS


--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                      2003            2002
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
CURRENT ASSETS
    Cash and cash equivalents                                                 $  2,945,960    $    540,375
    Certificate of deposit                                                         250,000              --
    Accounts receivable, net                                                     1,658,114       1,948,004
    Inventories, net                                                             1,973,817       1,463,658
    Other current assets                                                            96,550         226,774
                                                                              ------------    ------------
        Total Current Assets                                                     6,924,441       4,178,811
                                                                              ------------    ------------

PROPERTY AND EQUIPMENT, NET                                                      3,589,704       3,248,973
                                                                              ------------    ------------

OTHER ASSETS
    Goodwill                                                                     2,748,879       2,748,879
    Other assets                                                                   639,861         170,653
                                                                              ------------    ------------
        Total Other Assets                                                       3,388,740       2,919,532
                                                                              ------------    ------------

           TOTAL ASSETS                                                       $ 13,902,885    $ 10,347,316
                                                                              ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Checks issued in excess of cash in bank                                   $    147,398    $         --
    Wholesale line of credit                                                       976,314       1,290,383
    Current portion of long-term debt                                              998,813         321,589
    Current portion of note payable - stockholder                                   81,554              --
    Current portion of capital lease obligations                                    54,939          59,570
    Accounts payable                                                             1,771,699       1,735,931
    Accrued liabilities                                                          1,459,705         714,479
    Deferred service obligations and revenue                                       315,227         309,729
                                                                              ------------    ------------
        Total Current Liabilities                                                5,805,649       4,431,681

LONG-TERM LIABILITIES
    Long-term debt, net                                                          2,087,156       3,114,006
    Note payable - stockholder, net of current portion                              32,837              --
    Capital lease obligations, net of current portion                              142,898         159,344
                                                                              ------------    ------------
        Total Liabilities                                                        8,068,540       7,705,031
                                                                              ------------    ------------

MINORITY INTEREST IN SUBSIDIARY                                                     26,634              --
                                                                              ------------    ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
    Cumulative convertible preferred stock, no par value:
        8% Class A (27,931 and 27,831 shares issued and outstanding,
         $293,276 and $292,226 liquidation preference)                             419,752         418,252
        10% Class B (8,700 and 6,200 shares issued and outstanding, $91,350
         and $65,100 liquidation preference)                                        62,000          62,000
        10% Class C (125,400 and 131,510 shares issued and outstanding,
         $1,254,000 and $1,315,100 liquidation preference)                       1,611,105       1,699,407
        15% Class E (77,650 and 70,000 shares issued and outstanding,
         $776,500 and $700,000 liquidation preference)                             438,964         395,778
    Common stock, no par value (19,036,805 and 13,110,477 shares issued;
        19,019,786 and 13,065,410 shares outstanding)                            7,726,505       4,465,832
    Stock subscriptions receivable                                                (418,085)       (633,195)
    Options and warrants                                                        30,514,872      26,632,299
    Unamortized compensation                                                      (217,210)       (682,089)
    Accumulated deficit                                                        (34,330,192)    (29,715,999)
                                                                              ------------    ------------
           Total Stockholders' Equity                                            5,807,711       2,642,285
                                                                              ------------    ------------

               TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $ 13,902,885    $ 10,347,316
                                                                              ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                                                          PAGE 2
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  Years Ended December 31, 2003, 2002 and 2001


<TABLE>
<CAPTION>
                                                                        2003               2002               2001
                                                          ------------------ ------------------ ------------------
<S>                                                       <C>                <C>                <C>
REVENUES                                                  $       22,640,421 $       24,540,969 $       32,260,777
                                                          ------------------ ------------------ ------------------

COST AND EXPENSES
    Cost of products and services                                 15,952,019         18,036,750         25,295,186
    Selling, general and administrative                           10,184,709          9,337,292         10,962,739
                                                          ------------------ ------------------ ------------------
        Total costs and expenses                                  26,136,728         27,374,042         36,257,925
                                                          ------------------ ------------------ ------------------

LOSS FROM OPERATIONS                                             (3,496,307)        (2,833,073)        (3,997,148)
                                                          ------------------ ------------------ ------------------

OTHER INCOME (EXPENSE)
    Interest expense                                               (897,704)        (1,604,512)        (1,446,868)
    Interest income                                                   16,309             64,083             63,717
    Other income (expense)                                          (20,668)           (64,557)             54,747
                                                          ------------------ ------------------ ------------------
        Total Other Expense                                        (902,063)        (1,604,986)        (1,328,404)
                                                          ------------------ ------------------ ------------------
LOSS BEFORE MINORITY INTEREST IN SUBSIDIARY                      (4,398,370)        (4,438,059)        (5,325,552)

    Minority interest in subsidiary                                   33,366                --                 --
                                                          ------------------ ------------------ ------------------

NET LOSS                                                         (4,365,004)        (4,438,059)        (5,325,552)

    Preferred stock dividends                                        248,689            153,578            432,669
                                                          ------------------ ------------------ ------------------

LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS                  $      (4,613,693) $      (4,591,637) $      (5,758,221)
                                                          ================== ================== ==================

LOSS PER COMMON SHARE- BASIC AND DILUTED                  $           (0.29) $           (0.39) $           (0.66)
                                                          ================== ================== ==================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND
    DILUTED                                                       16,112,231         11,735,095          8,762,814
                                                          ================== ================== ==================
</TABLE>


          See accompanying notes to consolidated financial statements.


                                                                          PAGE 3
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years Ended December 31, 2003, 2002, and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                     Cumulative Convertible Preferred Stock
                                                 --------------------------------------------------------------------------

                                                      8% Class A               10% Class B                 10% Class C
                                                 ----------------------    ----------------------    ----------------------
                                                  Shares        Amount      Shares        Amount      Shares        Amount
                                                 ---------    ---------    ---------    ---------    ---------    ---------


<S>                                              <C>          <C>             <C>       <C>            <C>        <C>
BALANCES, December 31, 2000                             --    $      --       22,836    $ 218,869      150,810    $1,951,003
 Stock issued:
    Cash                                            32,050      320,500           --           --           --           --
    Stock subscriptions receivable                      --           --           --           --           --           --
    Acquisition of assets                           10,640      106,400           --           --           --           --
    Purchase of intangible asset                        --           --           --           --           --           --
    Guarantee of debt financing                         --           --           --           --           --           --
    Conversion of accounts payable                   3,500       35,000           --           --           --           --
    Conversion of accrued liabilities                9,631       96,306           --           --           --           --
    Conversion of notes payable                      5,804       58,044           --           --           --           --
    Conversion of preferred stock                  (31,000)    (310,000)     (13,150)    (131,500)      (7,800)     (78,000)
    Conversion of dividends payable                  6,030       60,300           --           --           --           --
 Redemption of preferred stock                      (7,783)     (77,830)        (986)        (369)      (3,500)     (35,000)
 Discount on preferred stock related to                 --      145,147           --           --           --      (37,556)
  warrants
 Interest receivable on stock subscription              --           --           --           --           --           --
  receivable
 Warrants issued:                                       --           --
    Preferred stock                                     --           --           --           --           --           --
    Common stock                                        --           --           --           --           --           --
    Debt                                                --           --           --           --           --           --
 Deferred compensation expense related to
  stock options issued below fair market value          --           --           --           --           --           --
 Deferred compensation expense                          --           --           --           --           --           --
 Restricted stock:                                      --           --
    Issued                                              --           --           --           --           --           --
    Forfeited                                           --           --           --           --           --           --
    Amortization expense                                --           --           --           --           --           --
 Repricing of warrants                                  --           --           --           --           --           --
 Embedded value with Pyramid Trading warrants           --           --           --           --           --           --
 Preferred stock dividends                              --           --           --           --           --           --
 Net loss                                               --           --           --           --           --           --
                                                 ---------    ---------    ---------    ---------    ---------    ---------

BALANCES, December 31, 2001                         28,872      433,867        8,700       87,000      139,510    1,800,447
 Stock issued:
    Cash                                                --           --           --           --           --           --
    Reduction of stock subscriptions                    --           --           --           --           --           --
       receivable for fees related to equity
       transactions
    Acquisition of assets                            1,859       18,590           --           --           --           --
    Guarantee of debt financing                         --           --           --           --           --           --
</TABLE>

<PAGE>



<TABLE>
<CAPTION>
                                                      14% Class D               15% Class E
                                                 ----------------------    ---------------------
                                                  Shares       Amount       Shares       Amount
                                                 ---------    ---------    ---------   ---------
<S>                                                 <C>       <C>          <C>         <C>
BALANCES, December 31, 2000                         72,500    $ 802,813           --   $      --
 Stock issued:
    Cash                                                --           --           --          --
    Stock subscriptions receivable                      --           --           --          --
    Acquisition of assets                               --           --           --          --
    Purchase of intangible asset                        --           --           --          --
    Guarantee of debt financing                         --           --           --          --
    Conversion of accounts payable                      --           --           --          --
    Conversion of accrued liabilities                   --           --           --          --
    Conversion of notes payable                     10,000      100,000           --          --
    Conversion of preferred stock                       --           --           --          --
    Conversion of dividends payable                     --           --           --          --
 Redemption of preferred stock                     (42,500)    (425,000)          --          --
 Discount on preferred stock related to                 --      (60,313)          --          --
  warrants
 Interest receivable on stock subscription              --           --           --          --
  receivable
 Warrants issued:
    Preferred stock                                     --           --           --          --
    Common stock                                        --           --           --          --
    Debt                                                --           --           --          --
 Deferred compensation expense related to
  stock options issued below fair market value          --           --           --          --
 Deferred compensation expense                          --           --           --          --
 Restricted stock:
    Issued                                              --           --           --          --
    Forfeited                                           --           --           --          --
    Amortization expense                                --           --           --          --
 Repricing of warrants                                  --           --           --          --
 Embedded value with Pyramid Trading warrants           --           --           --          --
 Preferred stock dividends                              --           --           --          --
 Net loss                                               --           --           --          --
                                                 ---------    ---------    ---------   ---------

BALANCES, December 31, 2001                         40,000      417,500           --          --
 Stock issued:
    Cash                                                --           --       10,000     100,000
    Reduction of stock subscriptions                    --           --           --          --
       receivable for fees related to equity
       transactions
    Acquisition of assets                               --           --           --          --
    Guarantee of debt financing                         --           --           --          --
</TABLE>



         See accompanying notesd to consolidated financial statements.






                                                                          Page 4
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years Ended December 31, 2003, 2002, and 2001
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                     Cumulative Convertible Preferred Stock
                                                 --------------------------------------------------------------------------------

                                                         8% Class A               10% Class B                 10% Class C
                                                 ------------------------    ------------------------    ------------------------
                                                   Shares        Amount        Shares        Amount        Shares        Amount
                                                 ----------    ----------    ----------    ----------    ----------    ----------
<S>                                              <C>          <C>             <C>       <C>            <C>        <C>
    Services rendered                                    --            --            --            --            --            --
    Conversion of accounts payable                       --            --            --            --            --            --
    Conversion of notes payable and accrued
      interest                                           --            --            --            --            --            --
    Conversion of accrued interest                       --            --            --            --            --            --
    Conversion of preferred stock                        --            --        (2,500)      (25,000)       (2,500)      (25,000)
 Redemption of preferred stock                       (2,900)      (29,000)           --            --        (5,500)      (55,000)
 Discount on preferred stock related to
   warrants issued                                       --        (5,205)           --            --            --       (21,040)
 Interest receivable on stock subscription               --            --            --            --            --            --
 receivable
 Warrants issued:
    Preferred stock                                      --            --            --            --            --            --
    Common stock                                         --            --            --            --            --            --
    Debt                                                 --            --            --            --            --            --
 Deferred compensation expense related to
  stock options issued below fair market value           --            --            --            --            --            --
 Deferred compensation expense                           --            --            --            --            --            --
 Restricted stock:
    Issued and outstanding                               --            --            --            --            --            --
    Forfeited                                            --            --            --            --            --            --
    Amortization expense                                 --            --            --            --            --            --
 Embedded value with Pyramid Trading warrants            --            --            --            --            --            --
 Preferred stock dividends                               --            --            --            --            --            --
 Net loss                                                --            --            --            --            --            --
                                                 ----------    ----------    ----------    ----------    ----------    ----------

BALANCES, December 31, 2002                          27,831       418,252         6,200        62,000       131,510     1,699,407
 Stock issued:
    Cash                                                100         1,000         2,500        25,000            --            --
    Exercise of warrants                                 --            --            --            --            --            --
    Cashless exercise of warrants                        --            --            --            --            --            --
    Exercise of stock options                            --            --            --            --            --            --
    Reduction of stock subscriptions                     --            --            --            --            --            --
       receivable for fees related to equity
       transactions
    Acquisition of assets                                --            --            --            --            --            --
    Conversion of accounts payable                       --            --            --            --         7,200        72,000
    Conversion of notes payable                          --            --            --            --            --            --
    Conversion of accrued interest                       --            --            --            --            --            --
    Conversion of preferred stock                        --            --            --            --        (4,000)      (40,000)
    Conversion of dividends payable                      --            --            --            --            --            --
 Redemption of preferred stock                           --            --            --            --        (9,310)      (93,100)
 Intrinsic value of convertible feature                  --           500            --            --            --       (27,202)
 Discount on preferred stock related to
   warrants issued                                       --            --            --       (25,000)           --            --
 Stock subscriptions receivable:
    Cash payments                                        --            --            --            --            --            --
    Increase reserve                                     --            --            --            --            --            --
    Interest collected                                   --            --            --            --            --            --
 Warrants issued:
    Preferred stock                                      --            --            --            --            --            --
    Common stock                                         --            --            --            --            --            --
</TABLE>

<PAGE>



<TABLE>
<CAPTION>
                                                       14% Class D                 15% Class E
                                                 ------------------------    -----------------------
                                                   Shares       Amount         Shares       Amount
                                                 ----------    ----------    ----------   ----------
<S>                                              <C>           <C>           <C>          <C>
    Services rendered                                    --            --            --           --
    Conversion of accounts payable                       --            --            --           --
    Conversion of notes payable and accrued
      interest                                      (30,000)     (300,000)       60,000      600,000
    Conversion of accrued interest                       --            --            --           --
    Conversion of preferred stock                   (10,000)     (100,000)           --           --
 Redemption of preferred stock                           --            --            --           --
 Discount on preferred stock related to
   warrants issued                                       --       (17,500)           --     (304,222)
 Interest receivable on stock subscription               --            --            --           --
 receivable
 Warrants issued:
    Preferred stock                                      --            --            --           --
    Common stock                                         --            --            --           --
    Debt                                                 --            --            --           --
 Deferred compensation expense related to
  stock options issued below fair market value           --            --            --           --
 Deferred compensation expense                           --            --            --           --
 Restricted stock:
    Issued and outstanding                               --            --            --           --
    Forfeited                                            --            --            --           --
    Amortization expense                                 --            --            --           --
 Embedded value with Pyramid Trading warrants            --            --            --           --
 Preferred stock dividends                               --            --            --           --
 Net loss                                                --            --            --           --
                                                 ----------    ----------    ----------   ----------

BALANCES, December 31, 2002                              --            --        70,000      395,778
 Stock issued:
    Cash                                                 --            --            --           --
    Exercise of warrants                                 --            --            --           --
    Cashless exercise of warrants                        --            --            --           --
    Exercise of stock options                            --            --            --           --
    Reduction of stock subscriptions                     --            --            --           --
       receivable for fees related to equity
       transactions
    Acquisition of assets                                --            --         7,650       76,500
    Conversion of accounts payable                       --            --            --           --
    Conversion of notes payable                          --            --            --           --
    Conversion of accrued interest                       --            --            --           --
    Conversion of preferred stock                        --            --            --           --
    Conversion of dividends payable                      --            --            --           --
 Redemption of preferred stock                           --            --            --           --
 Intrinsic value of convertible feature                  --            --            --           --
 Discount on preferred stock related to
   warrants issued                                       --            --            --      (33,314)
 Stock subscriptions receivable:
    Cash payments                                        --            --            --           --
    Increase reserve                                     --            --            --           --
    Interest collected                                   --            --            --           --
 Warrants issued:
    Preferred stock                                      --            --            --           --
    Common stock                                         --            --            --           --
</TABLE>




          See accompanying notes to consolidated financial statements.




                                                                          Page 5
<PAGE>

                      VICOM, INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years Ended December 31, 2003, 2002, and 2001
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                     Cumulative Convertible Preferred Stock
                                                 ---------------------------------------------------------------------------

                                                         8% Class A               10% Class B                10% Class C
                                                 ------------------------   -----------------------   -----------------------
                                                   Shares        Amount        Shares      Amount      Shares        Amount
                                                  ----------   ----------   ----------   ----------   ----------   ----------
<S>                                              <C>          <C>             <C>       <C>            <C>        <C>
    Debt                                                  --           --           --           --           --           --
    Services rendered                                     --           --           --           --           --           --
 Deferred compensation expense related to
   stock options issued below fair market value           --           --           --           --           --           --
 Deferred compensation expense                            --           --           --           --           --           --
 Restricted stock:
    Forfeited                                             --           --           --           --           --           --
    Amortization expense                                  --           --           --           --           --           --
 Embedded value with Laurus warrants                      --           --           --           --           --           --
 Preferred stock dividends                                --           --           --           --           --           --
 Net loss                                                 --           --           --           --           --           --
                                                  ----------   ----------   ----------   ----------   ----------   ----------

BALANCES, December 31, 2003                           27,931   $  419,752        8,700   $   62,000      125,400   $1,611,105
                                                  ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>

<TABLE>
<CAPTION>
                                                       14% Class D                 15% Class E
                                                  -----------------------   -----------------------
                                                    Shares       Amount       Shares       Amount
                                                  ----------   ----------   ----------   ----------
<S>                                              <C>           <C>           <C>          <C>
    Debt                                                  --           --           --           --
    Services rendered                                     --           --           --           --
 Deferred compensation expense related to
   stock options issued below fair market value           --           --           --           --
 Deferred compensation expense                            --           --           --           --
 Restricted stock:
    Forfeited                                             --           --           --           --
    Amortization expense                                  --           --           --           --
 Embedded value with Laurus warrants                      --           --           --           --
 Preferred stock dividends                                --           --           --           --
 Net loss                                                 --           --           --           --
                                                  ----------   ----------   ----------   ----------

BALANCES, December 31, 2003                               --   $       --       77,650   $  438,964
                                                  ==========   ==========   ==========   ==========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                                                          Page 6
<PAGE>

                      VICOM, INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years Ended December 31, 2003, 2002, and 2001


--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                Common Stock              Stock          Options
                                                       ----------------------------   Subscriptions        and
                                                          Shares          Amount        Receivable       Warrants
                                                       ------------    ------------    ------------    ------------
<S>                                                       <C>          <C>             <C>             <C>
BALANCES, December 31, 2000                               8,137,181    $  1,340,074    $         --    $ 14,347,833
 Stock issued:
   Cash                                                   1,092,953         421,566              --              --
   Stock subscriptions receivable                           800,000         610,000        (610,000)             --
   Acquisition of assets                                     87,000         261,000              --              --
   Purchase of intangible assets                             50,000          83,750              --              --
   Guarantee of debt financing                              100,000         120,000              --              --
   Conversion of accounts payable                                --              --              --              --
   Conversion of accrued liabilities                         10,000           9,007              --              --
   Conversion of notes payable                               20,000          50,000              --              --
   Conversion of preferred stock                            382,027         528,742              --              --
   Conversion of dividends payable                               --              --              --              --
Redemption of preferred stock                                    --              --              --              --
Discount on preferred stock related to warrants                  --              --              --              --
Interest receivable on stock subscription receivable             --              --         (21,619)             --
Warrants issued:
   Preferred stock                                               --              --              --          87,403
   Common stock                                                  --              --              --         544,683
   Debt                                                          --              --              --       1,382,126
Deferred compensation expense related to stock
options issued below fair market value                                                                    1,244,250
Deferred compensation expense                                    --              --              --              --
Restricted stock
   Issued                                                    83,000         308,145              --              --
   Forfeited                                                (82,711)       (289,180)             --              --
   Amortization expense                                          --              --              --              --
Repricing of warrants                                            --              --              --       6,919,692
Embedded value with Pyramid Trading warrants                     --              --              --         431,925
Preferred stock dividends                                        --              --              --              --
Net loss                                                         --              --              --              --
                                                       ------------    ------------    ------------    ------------
BALANCES, December 31, 2001                              10,679,450       3,443,104        (631,619)     24,957,912
 Stock issued:
   Cash                                                   1,548,120         274,414           7,850              --
   Reduction of stock subscriptions receivable for
      fees related to equity transactions                        --         (40,563)         40,563              --
   Acquisition of assets                                         --              --              --         (18,590)
   Guarantee of debt financing                               25,000          14,750              --              --
   Services rendered                                         35,214          27,700              --              --
   Conversion of accounts payable                             7,500           7,255              --              --
   Conversion of notes payable and accrued interest         554,569         460,001              --              --
   Conversion of accrued interest                           117,787         119,881              --              --
</TABLE>



<PAGE>

<TABLE>
<CAPTION>
                                                        Unamortized     Accumulated
                                                       Compensation       Deficit         Total
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
BALANCES, December 31, 2000                            $   (278,138)   $(12,506,102)   $  5,876,352
 Stock issued:
   Cash                                                          --              --         742,066
   Stock subscriptions receivable                                --              --              --
   Acquisition of assets                                         --              --         367,400
   Purchase of intangible assets                                 --              --          83,750
   Guarantee of debt financing                                   --              --         120,000
   Conversion of accounts payable                                --              --          35,000
   Conversion of accrued liabilities                             --              --         105,313
   Conversion of notes payable                                   --              --         208,044
   Conversion of preferred stock                                 --              --           9,242
   Conversion of dividends payable                               --              --          60,300
Redemption of preferred stock                                    --              --        (538,199)
Discount on preferred stock related to warrants                  --          68,948         116,226
Interest receivable on stock subscription receivable             --              --         (21,619)
Warrants issued:
   Preferred stock                                               --              --          87,403
   Common stock                                                  --              --         544,683
   Debt                                                          --              --       1,382,126
Deferred compensation expense related to stock
options issued below fair market value                   (1,244,250)             --              --
Deferred compensation expense                               239,461              --         239,461
Restricted stock
   Issued                                                  (308,145)             --              --
   Forfeited                                                289,180              --              --
   Amortization expense                                      92,749              --          92,749
Repricing of warrants                                            --      (6,919,692)             --
Embedded value with Pyramid Trading warrants                     --              --         431,925
Preferred stock dividends                                        --        (432,669)       (432,669)
Net loss                                                         --      (5,325,552)     (5,325,552)
                                                       ------------    ------------    ------------
BALANCES, December 31, 2001                              (1,209,143)    (25,115,067)      4,184,001
 Stock issued:
   Cash                                                          --              --         382,264
   Reduction of stock subscriptions receivable for
      fees related to equity transactions                        --              --              --
   Acquisition of assets                                         --              --              --
   Guarantee of debt financing                                   --              --          14,750
   Services rendered                                             --              --          27,700
   Conversion of accounts payable                                --              --           7,255
   Conversion of notes payable and accrued interest              --              --         760,001
   Conversion of accrued interest                                --              --         119,881
</TABLE>


          See accompanying notes to consolidated financial statements.

                                                                          Page 7

<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years Ended December 31, 2003, 2002, and 2001


--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                           Common Stock            Stock          Options
                                                   ---------------------------- Subscriptions       and
                                                     Shares          Amount      Receivable       Warrants
                                                   -----------    -----------    -----------    -----------
<S>                                                       <C>          <C>             <C>             <C>
   Conversion of preferred stock                       140,000        150,000             --             --
Redemption of preferred stock                               --             --             --             --
Discount on preferred stock related to warrants
issued                                                      --             --             --             --
Interest receivable on stock subscription
receivable                                                  --             --        (49,989)            --
Warrants issued:
   Preferred stock                                          --             --             --        324,324
   Common stock                                             --             --             --        575,119
    Debt                                                    --             --             --        879,382
 Deferred compensation expense related to stock
  options issued below fair market value                    --         53,745             --        (53,345)
 Deferred compensation expense                              --             --             --             --
 Restricted stock:
    Issued and outstanding                              22,434         21,255             --             --
    Forfeited                                          (19,597)       (65,710)            --             --
    Amortization expense                                    --             --             --             --
 Embedded value with Pyramid Trading warrants               --             --             --        (32,503)
 Preferred stock dividends                                  --             --             --             --
 Net loss                                                   --             --             --             --
                                                   -----------    -----------    -----------    -----------

BALANCES, December 31, 2002                         13,110,477      4,465,832       (633,195)    26,632,299
 Stock issued:
    Cash                                             4,477,279      1,947,197             --             --
    Exercise of warrants                               258,790        262,030             --             --
    Cashless exercise of warrants                      141,529             --             --             --
    Exercise of stock options                            3,000          3,750             --             --
    Reduction of stock subscriptions receivable             --        (36,977)        36,977             --
       for fees related to equity transactions
    Acquisition of assets                                   --             --             --             --
    Conversion of accounts payable                      85,000        120,690             --             --
    Conversion of notes payable                        654,202        762,000             --             --
    Conversion of accrued interest                      63,539         66,172             --             --
    Conversion of preferred stock                       66,666         40,000             --             --
    Conversion of dividends payable                    187,164        113,209             --             --
 Redemption of preferred stock                              --             --             --             --
 Intrinsic value of convertible feature                     --             --             --             --
 Discount on preferred stock related to warrants            --             --             --             --
    issued
 Stock subscriptions receivable:
    Cash payments                                           --             --        105,806             --
    Increase reserve                                        --             --         71,000             --
    Interest collected                                      --             --          1,327             --
 Warrants issued:
    Preferred stock                                         --             --             --         58,314
    Common stock                                            --             --             --      2,050,507
    Debt                                                    --             --             --        883,711
    Services rendered                                       --             --             --        321,920
 Deferred compensation expense related to stock
    options issued below fair market value                  --             --             --             --
 Deferred compensation expense                              --             --             --             --
 Restricted stock:
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
                                                   Unamortized    Accumulated
                                                  Compensation      Deficit         Total
                                                   -----------    -----------    -----------
<S>                                                    <C>             <C>             <C>
   Conversion of preferred stock                            --             --             --
Redemption of preferred stock                               --             --        (84,000)
Discount on preferred stock related to warrants
issued                                                      --         (9,295)      (357,262)
Interest receivable on stock subscription
receivable                                                  --             --        (49,989)
Warrants issued:
   Preferred stock                                          --             --        324,324
   Common stock                                             --             --        575,119
    Debt                                                    --             --        879,382
 Deferred compensation expense related to stock
  options issued below fair market value                 4,307             --          4,707
 Deferred compensation expense                          78,292             --         78,292
 Restricted stock:
    Issued and outstanding                             (21,255)            --             --
    Forfeited                                           65,710             --             --
    Amortization expense                               400,000             --        400,000
 Embedded value with Pyramid Trading warrants               --             --        (32,503)
 Preferred stock dividends                                  --       (153,578)      (153,578)
 Net loss                                                   --     (4,438,059)    (4,438,059)
                                                   -----------    -----------    -----------

BALANCES, December 31, 2002                           (682,089)   (29,715,999)     2,642,285
 Stock issued:
    Cash                                                    --             --      1,973,197
    Exercise of warrants                                    --             --        262,030
    Cashless exercise of warrants                           --             --             --
    Exercise of stock options                               --             --          3,750
    Reduction of stock subscriptions receivable             --             --             --
       for fees related to equity transactions
    Acquisition of assets                                   --             --         76,500
    Conversion of accounts payable                          --             --        192,690
    Conversion of notes payable                             --             --        762,000
    Conversion of accrued interest                          --             --         66,172
    Conversion of preferred stock                           --             --             --
    Conversion of dividends payable                         --             --        113,209
 Redemption of preferred stock                              --             --        (93,100)
 Intrinsic value of convertible feature                     --           (500)       (27,202)
 Discount on preferred stock related to warrants            --             --        (58,314)
    issued
 Stock subscriptions receivable:
    Cash payments                                           --             --        105,806
    Increase reserve                                        --             --         71,000
    Interest collected                                      --             --          1,327
 Warrants issued:
    Preferred stock                                         --             --         58,314
    Common stock                                            --             --      2,050,507
    Debt                                                    --             --        883,711
    Services rendered                                       --             --        321,920
 Deferred compensation expense related to stock
    options issued below fair market value                 367             --            367
 Deferred compensation expense                          47,114             --         47,114
 Restricted stock:
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                          Page 8
<PAGE>

                      VICOM, INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years Ended December 31, 2003, 2002, and 2001


--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                Common Stock              Stock          Options
                                       ----------------------------   Subscriptions        and
                                          Shares          Amount        Receivable       Warrants
                                       ------------    ------------    -------------   ------------
<S>                                    <C>             <C>             <C>             <C>
    Forfeited                               (10,841)        (17,398)              --             --
    Amortization expense                         --              --               --             --
 Embedded value with Laurus warrants             --              --               --        568,121
 Preferred stock dividends                       --              --               --             --
 Net loss                                        --              --               --             --
                                       ------------    ------------    -------------   ------------

BALANCES, December 31, 2003              19,036,805    $  7,726,505    $ (418,085) $     30,514,872
                                       ============    ============    =============   ============
</TABLE>





<TABLE>
<CAPTION>
                                        Unamortized    Accumulated
                                       Compensation      Deficit           Total
                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
    Forfeited                                17,398              --              --
    Amortization expense                    400,000              --         400,000
 Embedded value with Laurus warrants             --              --         568,121
 Preferred stock dividends                       --        (248,689)       (248,689)
 Net loss                                        --      (4,365,004)     (4,365,004)
                                       ------------    ------------    ------------

BALANCES, December 31, 2003            $   (217,210)   $(34,330,192)   $  5,807,711
                                       ============    ============    ============
</TABLE>








          See accompanying notes to consolidated financial statements.



                                                                          Page 9
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years Ended December 31, 2003, 2002, and 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                            2003           2002           2001
                                                                                     -----------    -----------    -----------
<S>                                                                                  <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
        Net loss                                                                     $(4,365,004)   $(4,438,059)   $(5,325,552)
        Adjustments to reconcile net loss to cash flows from operating activities:
               Depreciation                                                              948,796        981,985      1,019,581
               Amortization                                                               47,583        133,472        391,183
               Amortization of deferred compensation                                     447,481        482,999        332,210
               Amortization of original issue discount                                   405,248      1,103,314        797,169
               Write off of notes receivable and investment                               19,069         60,000             --
               Reserve for stock subscriptions and interest receivable                    71,000             --             --
               Impairment reserve on property and equipment                                   --        119,480             --
               Common stock issued for services                                               --         27,700             --
               Loss on sale of property and equipment                                     79,394         31,412            846
               Interest receivable on stock subscription receivable                        1,327        (49,989)       (21,619)
               Warrants issued for services                                              321,920             --         87,403
               Warrants issued with debt conversion                                           --        183,903             --
               Discount on preferred stock related to warrants                                --             --        (33,178)
               Minority interest in subsidiary                                           (33,366)            --             --
               Changes in operating assets and liabilities:
                      Accounts receivable, net                                           289,890        576,509      3,087,313
                      Inventories, net                                                  (509,762)       182,783        705,050
                      Other current assets                                                70,264       (205,483)        47,031
                      Other assets                                                      (143,101)        43,210             --
                      Wholesale line of credit                                          (314,069)       (34,424)      (708,533)
                      Accounts payable and accrued liabilities                           122,403         38,344       (978,479)
                      Deferred service obligations and revenue                           (39,321)      (106,877)        97,465
                                                                                     -----------    -----------    -----------
                             Net Cash Flows from Operating Activities                 (2,580,248)      (869,721)      (502,110)
                                                                                     -----------    -----------    -----------


CASH FLOWS FROM INVESTING ACTIVITIES
        Proceeds from sale of property and equipment                                      15,492      1,239,313         60,019
        Purchases of property and equipment                                             (526,936)    (1,275,434)    (1,884,945)
        Payments received on notes receivable                                                 --             --         59,084
        Payments for investment in joint venture                                         (64,878)            --             --
        Purchase of certificate of deposit                                              (250,000)            --             --
                                                                                     -----------    -----------    -----------
               Net Cash Flows from Investing Activities                                 (826,322)       (36,121)    (1,765,842)
                                                                                     -----------    -----------    -----------


CASH FLOWS FROM FINANCING ACTIVITIES
        Increase in checks issued in excess of cash in bank                              147,398             --             --
        Proceeds from long-term debt and warrants issued with long-term debt           1,659,726      1,172,064      1,919,650
        Proceeds from note payable - stockholder                                         124,000             --             --
        Payments received on stock subscriptions receivable                              105,806          6,786             --
        Payments on long-term debt                                                      (200,768)      (131,605)      (461,808)
        Payments on note payable - stockholder                                            (9,609)            --             --
        Payments on capital lease obligations                                            (75,301)      (937,828)      (315,770)
        Proceeds from issuance of stock and warrants                                   4,023,704        949,533      1,270,612
        Redemption of preferred stock                                                    (93,100)       (84,000)      (538,199)
        Preferred dividends                                                             (135,481)      (153,578)      (143,167)
        Exercise of stock options                                                          3,750             --             --
        Exercise of warrants                                                             262,030             --             --
                                                                                     -----------    -----------    -----------
               Net Cash Flows from Financing Activities                                5,812,155        821,372      1,731,318
                                                                                     -----------    -----------    -----------


                      NET CHANGE IN CASH AND CASH EQUIVALENTS                          2,405,585        (84,470)      (536,634)


 CASH AND CASH EQUIVALENTS - Beginning of Year                                           540,375        624,845      1,161,479
                                                                                     -----------    -----------    -----------


         CASH AND CASH EQUIVALENTS - END OF YEAR                                     $ 2,945,960    $   540,375    $   624,845
                                                                                     ===========    ===========    ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                                                         Page 10
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



-------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-------------------------------------------------------------------------------

    Nature of Business

Vicom,  Inc. (the Company) was  incorporated in Minnesota in September 1975. The
Company  provides  voice,  data and video  services to business,  government and
multi-dwelling  customers.  The  Company's  products  and  services  are sold to
customers located throughout the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going concern that  contemplates  the realization
of assets and satisfaction of liabilities in the normal course of business.  For
the years ended  December 31, 2003,  2002,  and 2001,  the Company  incurred net
losses of $4,365,004,  $4,438,059 and $5,325,552,  respectively. At December 31,
2003,  the Company had an  accumulated  deficit of  $34,330,192.  The  Company's
ability to continue as a going concern is dependent on it  ultimately  achieving
profitability  and/or raising additional  capital.  Management intends to obtain
additional  debt or equity capital to meet all of its existing cash  obligations
and fund commitments on planned  Multiband  projects;  however,  there can be no
assurance that the sources will be available or available on terms  favorable to
the Company.  Management anticipates that the impact of the actions listed below
will generate sufficient cash flows to pay current  liabilities,  long-term debt
and capital lease obligations and fund the Company's future operations:

1.  Continued   reduction  of  operating   expenses  by   controlling   payroll,
professional  fees and other  general and  administrative  expenses.
2.  Solicit  additional  equity  investment  in the  Company  by either  issuing
preferred or common stock.
3. Continue to market Multiband services and acquire  additional  multi-dwelling
unit customers.
4. Control capital expenditures by contracting  Multiband services and equipment
through a  landlord-owned  equipment  program.
5. Establish market for wireless internet services.

    Principles of Consolidation

The   consolidated   financial   statements   include  the  accounts  of  Vicom,
Incorporated (Vicom) and its wholly owned subsidiaries,  Corporate Technologies,
USA, Inc. (CTU), and Multiband,  Inc. (Multiband) which provides voice, data and
video  services to  residential  multi-dwelling  units.  In February  2003,  the
Company  formed a 50% owned  subsidiary,  Multiband USA, Inc. (MB USA) with Pace
Electronics,  Inc. (PACE) a video wholesaler,  and provides the same services as
Multiband).  As part of the subsidiary  agreement,  the Company has the right to
elect  two  of the  three  board  of  directors  and,  at its  sole  option  and
discretion,  shall have the right,  but not the  obligation to convert one Vicom
common share for every ten shares of  Multiband  USA issued to PACE (Notes 2 and
17). Based on the Company's  control of the  subsidiary,  the operating  results
have been consolidated.  All significant intercompany  transactions and balances
have been eliminated in consolidation.

On January 1, 2004, the Company merged Multiband into CTU.

    Revenues and Cost Recognition

The Company earns revenues from five sources:  1) Video and computer  technology
products  which  are  sold  but  not  installed,   2)  Voice,   video  and  data
communication products which are sold and installed, 3) Service revenues related
to communication products which are sold and both installed and not installed 4)
Multiband user charges to multiple dwelling units, and 5) MB USA user charges to
timeshares.



                                                                         Page 11
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


Revenues  from video and computer  technology  products,  which are sold but not
installed, are recognized when delivered and the customer has accepted the terms
and has the ability to fulfill the terms. Product returns and customer discounts
are netted against revenues.

Customers  contract  for both the purchase  and  installation  of voice and data
networking  technology  products and certain video technologies  products on one
sales   agreement,   as   installation  of  the  product  is  essential  to  the
functionality  of the  product.  Revenues are  recognized  when the products are
delivered  and  installed  and the  customer  has accepted the terms and has the
ability to fulfill the terms.

Service revenues related to technology products including  consulting,  training
and support are  recognized  when the services are  provided.  Service  revenues
accounted for less than 10% of total  revenues for the years ended  December 31,
2003, 2002 and 2001. The Company, if the customer elects,  enters into equipment
maintenance  agreements  for  products  sold  once the  original  manufacturer's
warranty has expired.  Revenues from all equipment  maintenance  agreements  are
recognized on a straight-line  basis over the terms of each contract.  Costs for
services are expensed as incurred.

Multiband  and MB USA user charges are  recognized as revenues in the period the
related services are provided.

Warranty costs incurred on new product sales are substantially reimbursed by the
equipment suppliers.

    Cash and Cash Equivalents

The Company includes as cash equivalents,  investments with original  maturities
of three months or less when purchased, which are readily convertible into known
amounts of cash. The Company deposits its cash in high credit quality  financial
institutions. The balances, at times, may exceed federally insured limits.

    Certificate of Deposit

The Company has a certificate of deposit which matures in October 2004.

    Accounts Receivable

The Company reviews customers' credit history before extending  unsecured credit
and  establishes  an allowance  for  uncollectible  accounts  based upon factors
surrounding the credit risk of specific customers and other information.  Credit
risk on accounts  receivable  is  minimized as a result of the large and diverse
nature  of  the  Company's  customer  base.  Invoices  are  due  30  days  after
presentation.  Accounts  receivable  over 30 days are  considered  past due. The
Company does not accrue  interest on past due accounts  receivable.  Receivables
are written off only after all collection  attempts have failed and are based on
individual  credit  evaluation  and  specific  circumstances  of  the  customer.
Accounts receivable are shown net of an allowance for uncollectible  accounts of
$223,000  and  $236,000 at December  31, 2003 and 2002,  respectively.  Accounts
receivable  over 90 days were  $433,000  and  $331,000 at December  31, 2003 and
2002, respectively.


                                                                         Page 12
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



    Inventories

Inventories,  consisting principally of purchased telecommunication,  networking
and  computer  equipment  and parts,  are stated at the lower of cost or market.
Cost is  determined  using an  average  cost  method for  telecommunication  and
networking  equipment  and the  first-in,  first-out  (FIFO) method for computer
equipment.  Nonmonetary  exchanges  of  inventory  items with third  parties are
recorded  at the net book value of the items  exchanged  with no gains or losses
recognized.

    Property and Equipment

Property,   equipment   and  leasehold   improvements   are  recorded  at  cost.
Improvements are capitalized  while repairs and maintenance costs are charged to
operations  when  incurred.  Property and equipment is  depreciated or amortized
using the straight-line method over estimated useful lives ranging from three to
seven years. Leasehold improvements are amortized using the straight-line method
over the shorter of the lease term or the estimated useful life of the assets.

    Debt Issuance Costs

Debt  issuance  costs are amortized  over the life of the loan of  approximately
three years using the  straight-line  method,  which  approximates  the interest
method.

    Goodwilll and Other Intangible Assets

Goodwill  represents  the  excess of  acquisition  costs  over the fair value of
identifiable net assets acquired and was being amortized using the straight-line
method over ten years.  Accumulated  amortization  was  $782,278 at December 31,
2003 and 2002.

In June 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial  Accounting  Standards  (SFAS) No. 141,  "Business  Combinations",
effective  for  acquisitions  initiated  on or after July 1, 2001,  and No. 142,
"Goodwill and Other  Intangible  Assets",  effective for fiscal years  beginning
after  December 15,  2001.  SFAS No. 141  requires  that the purchase  method of
accounting be used for all business combinations  initiated after June 30, 2001,
and includes guidance on the initial recognition and measurement of goodwill and
other  intangible  assets  arising  from  business  combinations.  SFAS No.  142
indicates that goodwill (and intangible  assets deemed to have indefinite lives)
will no longer be  amortized  but will be  subject to annual  impairment  tests.
Other  intangible  assets will continue to be amortized over their useful lives.
The  Company  adopted  SFAS No.  142  effective  January 1,  2002.  The  Company
performed the required goodwill  impairment test during the years ended December
31, 2003 and 2002.










                                                                         Page 13
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



As part of compliance  with this standard,  the Company  obtained an independent
appraisal  to assess the fair value of its business  units to determine  whether
goodwill carried on its books was impaired and the extent of such impairment, if
any for the years ended  December 31, 2003 and 2002. For the year ended December
31, 2003, the independent appraisal used the discounted future returns method to
measure the fair value of its business units rather than the income method which
was used for 2002.  The  method of  valuation  was  changed  due to the  Company
changing  its  business  model and  historical  results,  which are used for the
income  method,  would not  accurately  evaluate  the  value of future  economic
benefits.  Under the discounted  future returns  method,  future benefits over a
period of time are estimated and then discounted back to present value.  For the
year ended December 31, 2002, the  independent  appraisal used the income method
to measure the fair value of its business units. Under the income method,  value
is dependent on the present value of future economic benefits to be derived from
ownership.  Future net cash flows available for  distribution  are discounted at
market-based  rates of return to provide  indications of value.  The independent
appraiser  used a  discount  factor of 16.8%  and  18.35%  for the  years  ended
December 31, 2003 and 2002, respectively. Based upon this independent appraisal,
the Company  determined that its current goodwill  balances were not impaired as
of December 31, 2003 and 2002.

Components of intangible assets are as follows:

<TABLE>
<CAPTION>
                                                         December 31, 2003                December 31, 2002
                                                -------------------------------   -------------------------------
                                                     Gross                            Gross
                                                    Carrying       Accumulated       Carrying       Accumulated
                                                     Amount        Amortization       Amount       Amortization
                                                --------------   --------------   --------------   --------------
<S>                                             <C>              <C>              <C>              <C>
Intangible assets subject to amortization
     Domain name                                $       83,750   $       39,083   $       83,750   $       22,333
     Access contracts                                   60,000           13,334               --               --
     Debt issuance costs                               115,500            3,208               --               --
     Customer cable lists                              300,000               --               --               --
                                                --------------   --------------   --------------   --------------
         Total                                  $      559,250   $       55,625   $       83,750   $       22,333
                                                ==============   ==============   ==============   ==============
Intangible assets not subject to amortization
     Goodwill                                   $    3,531,157   $      782,278   $    3,531,157   $      782,278
                                                ==============   ==============   ==============   ==============
</TABLE>

Amortization of intangible assets was $33,291,  $16,750 and $5,583 for the years
ended December 31, 2003,  2002 and 2001,  respectively.  Estimated  amortization
expense of intangible assets for the years ending December 31, 2004, 2005, 2006,
2007,  and  2008  is  $135,250,   $135,250,   $113,125,   $60,000  and  $60,000,
respectively. The Company's loss attributable to common stockholders,  excluding
goodwill  amortization  expense, for the years ended December 31, 2003, 2002 and
2001 would have been as follows had we adopted SFAS No. 142 on January 1, 2000:

<TABLE>
<CAPTION>
                                                              2003             2002             2001
                                                         --------------   --------------   --------------
<S>                                                      <C>              <C>              <C>
Loss attributable to common stockholders - as reported   $  (4,613,693)   $  (4,591,637)   $  (5,758,221)
SFAS No. 142 amortization adjustment                                --               --          345,600
Loss attributable to common stockholders - as adjusted      (4,613,693)      (4,591,637)      (5,412,621)
Basic and diluted net loss per share - as reported               (0.29)           (0.39)           (0.66)
Basic and diluted net loss per share - adjusted                  (0.29)           (0.39)           (0.62)
</TABLE>








                                                                         Page 14
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


    Intangible Assets

The Company  amortizes a domain name acquired during the year ended December 31,
2001 over its  estimated  useful  life of five  years  using  the  straight-line
method.  The Company  amortizes access contracts  acquired during the year ended
December  31,  2003  over the  estimate  useful  life of three  years  using the
straight-line  method.  The  Company  will  amortize  the  customer  cable lists
acquired on December 31, 2003 over five years beginning January 1, 2004.

    Advertising Costs

Advertising  costs are charged to expense as  incurred.  Advertising  costs were
$146,906,  $104,788 and $230,629 for the years ended December 31, 2003, 2002 and
2001,  respectively,  and are  included in selling,  general and  administrative
expenses in the consolidated statements of operations.

    Shipping and Handling Costs

In accordance  with Emerging  Issues Task Force (EITF) Issue 00-10,  "Accounting
for Shipping and Handling Fees and Costs," the Company is including shipping and
handling  revenues  in  revenues  and  shipping  and  handling  costs in cost of
products and services.

    Income Taxes

The Company utilizes the liability method of accounting for income taxes.  Under
this method, deferred tax assets and liabilities are recognized for the expected
future tax  consequences  attributable  to  temporary  differences  between  the
financial  statement and income tax reporting  bases of assets and  liabilities.
Deferred  tax assets are  reduced by a  valuation  allowance  to the extent that
realization is not assured.

    Stock-Based Compensation

In accordance with Accounting  Principles Board (APB) Opinion No. 25 and related
interpretations, the Company uses the intrinsic value-based method for measuring
stock-based compensation cost which measures compensation cost as the excess, if
any, of the quoted market price of the Company's  common stock at the grant date
over the  amount the  employee  must pay for the stock.  The  Company's  general
policy is to grant stock options at fair value at the date of grant. Options and
warrants issued to nonemployees  are recorded at fair value, as required by SFAS
No. 123  "Accounting for Stock-Based  Compensation,"  (SFAS No. 123),  using the
Black  Scholes  pricing  model.  The Company has  adopted  the  disclosure  only
provision of SFAS No. 148, "Accounting for Stock-Based Compensation."

Pursuant  to APB No. 25 and  related  interpretations,  $447,481,  $482,999  and
$332,210  of  compensation   cost  has  been  recognized  in  the   accompanying
consolidated  statements  of operations  for the years ended  December 31, 2003,
2002 and 2001, respectively.  Had compensation cost been recognized based on the
fair values of options at the grant dates consistent with the provisions of SFAS
No. 123, the Company's loss  attributable to common  stockholders  and basic and
diluted loss per common share would have  increased to the  following  pro forma
amounts for the years ended December 31:



                                                                         Page 15
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



<TABLE>
<CAPTION>
                                                                      2003                2002               2001
                                                          ----------------    ----------------   ----------------
<S>                                                       <C>                 <C>                <C>
Loss attributable to common stockholders                  $    (4,613,693)    $    (4,591,637)   $    (5,758,221)
Pro forma loss attributable to common shares              $    (5,363,381)    $    (4,915,649)   $    (6,131,692)

Basic and diluted net loss per share:
   As reported                                            $         (0.29)    $         (0.39)   $         (0.66)
   Pro forma loss attributable to common shares           $         (0.33)    $         (0.42)   $         (0.70)

Stock-based compensation:
   As reported                                            $        447,481    $        482,999   $        332,210
   Pro forma                                              $        749,688    $        324,012   $        373,471
</TABLE>

In determining the compensation  cost of the options granted during fiscal 2003,
2002,  and 2001,  as  specified  by SFAS No. 123,  the fair value of each option
grant has been  estimated  on the date of grant using the  Black-Scholes  option
pricing model and the weighted average  assumptions  used in these  calculations
are summarized as follows:

<TABLE>
<CAPTION>
                                                                 2003                   2002                 2001
                                                    ------------------     ------------------    -----------------
<S>                                                             <C>                    <C>                   <C>
Risk-free interest rate                                         3.00%                  4.40%                 5.00%
Expected life of options granted                              10 years              10 years               10 years
Expected volatility range                                        170%                   170%                  110%
Expected dividend yield                                            0%                     0%                    0%
</TABLE>

    Net Loss per Common Share

Basic net loss per common share is computed by dividing the loss attributable to
common  stockholders by the weighted average number of common shares outstanding
for the  reporting  period.  Diluted  net loss per common  share is  computed by
dividing loss  attributable  to common  stockholders  by the sum of the weighted
average number of common shares  outstanding  plus all  additional  common stock
that would have been  outstanding if potentially  dilutive common shares related
to  common  share  equivalents  (stock  options,  stock  warrants,   convertible
preferred  shares,  and issued but not  outstanding  restricted  stock) had been
issued.  All options,  warrants,  convertible  preferred shares,  and restricted
stock  outstanding  during the years ended December 31, 2003, 2002 and 2001 were
anti-dilutive.

    Recently Issued Accounting Pronouncements

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging Activities," effective for contracts entered
into or modified after June 30, 2003.  This amendment  clarifies when a contract
meets the characteristics of a derivative,  clarifies when a derivative contains
a financing  component and amends  certain other  existing  pronouncements.  The
adoption  of SFAS  No.  149 did not  have a  material  effect  on the  Company's
consolidated financial statements.




                                                                         Page 16
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
lnstruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
is effective for financial  instruments  entered into or modified  after May 31,
2003,  and otherwise is effective at the  beginning of the first interim  period
beginning  after June 15, 2003.  SFAS No. 150 requires the  classification  as a
liability of any financial  instruments with a mandatory  redemption feature, an
obligation to repurchase equity shares, or a conditional obligation based on the
issuance of a variable  number of its equity  shares.  The Company does not have
any financial  instruments  as defined by SFAS No. 150. The adoption of SFAS No.
150 did not have a  material  effect  on the  Company's  consolidated  financial
statements.

In  November  2002,  the FASB issued FASB  Interpretation  No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of   Indebtedness   of  Others"  (FIN  45).  FIN  45  clarifies  the
requirements  for  a  guarantor's  accounting  for  and  disclosure  of  certain
guarantees  issued  and  outstanding.   The  initial   recognition  and  initial
measurement provisions of FIN 45 are applicable to guarantees issued or modified
after December 31, 2002. The disclosure requirements of FIN 45 are effective for
financial statements for periods ending after December 15, 2002. The adoption of
FIN 45 did not effect the Company's consolidated financial statements.

In December 2003, the Financial  Accounting  Standards  Board (FASB) issued FASB
Interpretation  No. 46  (Revised  December  2003),  "Consolidation  of  Variable
Interest  Entities,  an  Interpretation  of ARB No. 51" (FIN 46R). This standard
replaces FIN 46, Consolidation of Variable Interest Entities" that was issued in
January 2003.  FIN 46R modifies or clarifies  various  provisions of FIN 46. FIN
46R addresses the  consolidation  of business  enterprises of variable  interest
entities  (VIEs),  as defined by FIN 46R. FIN 46R exempts certain  entities from
its requirements and provides for special effective dates for entities that have
fully or  partially  applied  FIN 46 prior to  issuance  of FIN 46R.  Otherwise,
application  of FIN 46R is required in financial  statements of public  entities
that have  interest  in  structures  commonly  referred  to as  special  purpose
entities for periods ending after December 15, 2003.  Application by the Company
for all other  types of VIEs is  required in  financial  statements  for periods
ending no later than the quarter  ended  January 31, 2005.  The Company does not
expect  the  adoption  of FIN 46R to have a  material  effect  on the  Company's
consolidated financial statements.

    Management's Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America 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.
Significant management estimates relate to the allowances for doubtful accounts,
inventory  obsolescence,   and  stock  subscriptions  and  interest  receivable,
property and equipment  estimated useful lives,  goodwill carrying value and the
valuation of deferred income tax assets.

    Financial Instruments

The carrying amounts for all financial instruments  approximates fair value. The
carrying amounts for cash and cash equivalents,  accounts  receivable,  accounts
payable  and accrued  liabilities  approximate  fair value  because of the short
maturity of these instruments. The fair value of capital lease obligations, note
payable-stockholder  and long-term debt  approximates the carrying amounts based
upon the  Company's  expected  borrowing  rate for debt with  similar  remaining
maturities and comparable risk.




                                                                         Page 17
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


    Reclassifications

Certain accounts in the prior years' consolidated financial statements have been
reclassified  for comparative  purposes to conform with the  presentation in the
current year consolidated financial statements.  These  reclassifications had no
effect on net loss or stockholders' equity.

--------------------------------------------------------------------------------
NOTE 2 - BUSINESS ACQUISITIONS
--------------------------------------------------------------------------------

During February 2003, the Company  incorporated a new  subsidiary,  MB USA. This
subsidiary was formed as a 50% owned joint venture agreement with PACE (Note 1).
The  reason  for the joint  venture  with  PACE is to  continue  to  expand  the
Company's services related to multi-users of voice, data and video services.

On April  25,  2003,  the  Company,  through  MB USA,  purchased  certain  video
equipment  assets,  related  rights to video  subscribers  and  rights of access
agreements from Suncoast  Automation,  Inc.  (Suncoast).  The purchase price was
allocated to the acquired  assets and assumed certain  liabilities  based on the
estimated  fair  values  as of the  acquisition  date.  The  purchase  price was
allocated to assets and liabilities acquired as follows:

       Property and equipment                         $         504,224
       Access contracts                                          60,000
       Capital lease obligations                               (54,224)
                                                      -----------------
          Net purchase price                          $         510,000
                                                      =================

The net  purchase  price  of  $510,000  consisted  entirely  of cash  paid.  The
consolidated  results of  operations  on an  unaudited  pro forma  basis are not
presented  separately as the results do not differ significantly from historical
amounts presented herein.

On December 31, 2003, the Company  purchased certain customer lists from Florida
Cable,  Inc.  (Florida  Cable) for $300,000  which was paid to Florida  Cable on
January 2, 2004.  In addition,  the Company  agreed to lease from Florida  Cable
equipment used in the operation of the cable  television  systems for six months
for $1.00. After the six month lease period has expired,  the Company has agreed
to purchase the equipment for $165,000. If the Company fails to pay the $165,000
in full, all rights and title of the customer lists  mentioned above will revert
back to Florida  Cable.  At December  31,  2003,  the Company has  recorded  the
$165,000 liability associated with the contingent purchase of equipment.



                                                                         Page 18
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001




-------------------------------------------------------------------------------
NOTE 3 - PROPERTY AND EQUIPMENT
-------------------------------------------------------------------------------

Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                           2003           2002
                                                                    -----------    -----------
<S>                                                                 <C>            <C>
          Leasehold improvements                                    $   764,064    $   732,931
          Property and equipment - owned                              5,318,243      4,230,560
          Property and equipment under capital lease  obligations
                                                                        428,749        456,124
                                                                    -----------    -----------
                                                                      6,511,056      5,419,615
          Less accumulated depreciation and amortization             (2,921,352)    (2,170,642)
                                                                    -----------    -----------
                                                                    $ 3,589,704    $ 3,248,973
                                                                    ===========    ===========
</TABLE>

Depreciation  and  amortization  expense on property and equipment was $948,796,
$981,985 and $1,019,581  for the years ended  December 31, 2003,  2002 and 2001,
respectively.

-------------------------------------------------------------------------------
NOTE 4 - OTHER ASSETS
-------------------------------------------------------------------------------

Other assets consisted of the following at December 31:

                                             2003       2002
                                         --------   --------
Other current assets:
   Current portion of notes receivable   $  2,983   $ 52,977
   Prepaid expenses and other              93,567    173,797
                                         --------   --------
           Total other current assets    $ 96,550   $226,774
                                         ========   ========

Noncurrent assets:
   Debt issuance costs, net              $112,292   $     --
   Access contracts, net                   46,666         --
   Domain name, net                        44,667     61,417
   Customer cable lists                   300,000         --
   Prepaid expenses and other             136,236    109,236
                                         --------   --------
           Total other assets            $639,861   $170,653
                                         ========   ========

At December 31, 2003 and 2002,  the Company had notes  receivable  of $2,983 and
$52,977, respectively. The remaining note was due in December 2003 with interest
of 12% and was unsecured.




                                                                         Page 19
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001




-------------------------------------------------------------------------------
NOTE 5 - ACCRUED LIABILITIES
-------------------------------------------------------------------------------

Accrued liabilities consisted of the following at December 31:

                                          2003         2002
                                    ----------   ----------
Payroll and related taxes           $  514,516   $  398,415
Accrued preferred stock dividends      277,928      138,288
Payable - Florida Cable                465,000           --
Other                                  202,261      177,776
                                    ----------   ----------
                                    $1,459,705   $  714,479
                                    ==========   ==========

-------------------------------------------------------------------------------
NOTE 6 - WHOLESALE LINE OF CREDIT
-------------------------------------------------------------------------------

At December 31,  2003,  the Company has a  $1,750,000  wholesale  line of credit
agreement with a financial  institution,  which expires on December 1, 2004, for
the purchase of certain resale merchandise from certain  suppliers.  Interest is
generally  at 0% (if  paid  within  certain  terms  of up to 45  days),  and the
wholesale  line of credit is  collateralized  by the accounts  receivable  up to
$300,000 as well as all of the inventory  financed and the $1,450,000 letters of
credit.  The  wholesale  line of credit  agreement is an  agreement  between the
Company, financial institution,  and certain vendors of the Company. The Company
receives  no  funds  from the  financial  institution,  but  pays the  financial
institution rather than certain vendors. The balance outstanding was $976,314 at
December 31, 2003.

At December 31,  2002,  the Company had a  $1,450,000  wholesale  line of credit
agreement  with a different  financial  institution,  which  expired with 30 day
notice by either  party,  for the purchase of certain  resale  merchandise  from
certain  suppliers.  Interest was generally at 0% (if paid within certain terms,
generally 30 days), and the wholesale line of credit was  collateralized  by the
related  inventories,  accounts receivable and the $1,450,000 letters of credit.
The wholesale  line of credit  agreement  was an agreement  between the Company,
financial institution,  and certain vendors of the Company. The Company received
no funds from the  financial  institution,  but paid the  financial  institution
rather than certain  vendors The balance  outstanding was $1,290,383 at December
31, 2002.



                                                                         Page 20
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



--------------------------------------------------------------------------------
NOTE 7 - LONG-TERM DEBT
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Long-term debt consisted of the following at December 31:

                                                                                                 2003                 2002
                                                                                        -------------        -------------
<S>                                                                                     <C>                  <C>
       Note payable - Pyramid  Trading Limited  Partnership,  net of unamortized
       original issue  discount and  beneficial  conversion of note payable into
       common  stock of $59,557  and  $59,250  at  December  31,  2003 and 2002,
       respectively, quarterly interest payments at 10% (effective interest rate
       of 54.2%) through May 2004,  monthly principal  payments of $40,000,  due
       May 2004, unsecured.                                                             $     140,443        $     902,971

       Debenture payable - Convergent  Capital Partners I, L.P., net of original
       issue  discount of $432,504  and  $595,295 at December 31, 2003 and 2002,
       respectively,  monthly interest only payments through July 2005,  monthly
       installments of $102,273  including  interest at 14% (effective  interest
       rate 18.4%) thereafter, due May 2007, secured by substantially all of the
       assets of the Company.                                                               1,967,496            1,804,705

       Demand debenture payable - Convergent  Capital Partners I, L.P.,  monthly
       interest  only  payments at 14%  through  May 2007,  due on demand or May
       2007, secured by substantially all of the assets of the Company.                       100,000              100,000

       Note payable - Lexus Tower Limited  Partnership,  monthly installments of
       $5,987 including  interest at 8.4%, due November 2010, secured by certain
       assets of the Company.                                                                 379,332              418,872

       Note payable - Laurus Master Fund LTD, net of unamortized  original issue
       discount and  beneficial  conversion of note payable into common stock of
       $1,208,847  at  December  31,  2003,  monthly   installments  of  $45,455
       beginning in March 2004, including interest at prime rate plus 3% but not
       less  than 7% (7% at  December  31,  2003)  (effective  interest  rate of
       174.6%),  due through  November  2006,  secured by certain  assets of the
       Company.                                                                               291,153                   --

       Notes payable, interest at 5.25% to 20% due through May
       2007, secured by certain assets of the Company.                                        207,545              209,047
                                                                                        -------------        -------------
        Total long-term debt                                                                3,085,969            3,435,595
       Less: current portion                                                                 (998,813)            (321,589)
                                                                                        -------------        -------------
        Long-term debt, net                                                             $   2,087,156        $   3,114,006
                                                                                        =============        =============
</TABLE>



                                                                         Page 21
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



Future maturities of long-term debt are as follows for the years ending December
31:

<TABLE>
<CAPTION>
<S>                                                                <C>
         2004                                                      $          998,813
         2005                                                               1,113,898
         2006                                                               1,838,008
         2007                                                                 650,923
         2008                                                                  59,072
         Thereafter                                                           126,163
                                                                   ------------------
         Total future minimum payments                                      4,786,877
         Less: original issue discounts and beneficial
           conversion feature                                             (1,700,908)
                                                                   ------------------
         Total long-term debt                                               3,085,969
         Less: current portion                                              (998,813)
                                                                   ------------------
             Long-term debt, net                                   $        2,087,156
                                                                   ==================
</TABLE>

In  2000,  the  Company  entered  into a  $2,250,000  debenture  agreement  with
Convergent  Capital  Partners I, L.P.,  with interest at 14% payable monthly and
monthly  payments of  $102,273  from August 1, 2003  through  June 1, 2005.  The
timing of  repayment  was changed to August 2005 through May 2007 as part of the
amendment  made in 2002. The debenture is secured by  substantially  all Company
assets. In connection with this debenture,  the Company issued 150,000 five-year
warrants  to purchase  common  stock at prices  ranging  from $1.50 to $5.20 per
share.  The proceeds of $2,250,000 were allocated  between the debenture and the
warrant  based on the  relative  fair  values of the  securities  at the time of
issuance.  The warrants were valued using the Black Scholes  pricing model.  The
resulting  original  issue  discount,  the fair value of the warrants,  is being
amortized over the life of the debenture using the straight-line  method,  which
approximates the interest method.

In 2002, the Company  amended the debenture  agreement with  Convergent  Capital
Partners I, L.P.,  and  borrowed an  additional  $150,000  with  interest at 14%
payable  monthly and monthly  principal  payments  from August 2005  through May
2007.  In  connection  with this  debenture,  the Company  issued an  additional
500,000  seven-year  warrants to purchase  common stock at $1.10 per share.  The
additional  warrants  were valued using the Black  Scholes  pricing  model.  The
resulting  original  issue  discount,  the fair value of the warrants,  is being
amortized over the life of the debenture using the straight-line  method,  which
approximates  the  interest  method.  The  Company was in  violation  of certain
covenants of this debt  agreement.  A waiver was obtained  from the lender.  The
debenture payable may be redeemed at the Company's option at a premium declining
ratably thereafter to par value in April 2005.

In January 2001, the Company  borrowed  $1,500,000  from Pyramid Trading Limited
Partnership  and issued a five-year  warrant to the lender to  purchase  375,000
common  shares  at  $4.00  per  share  through  January  2003.  The debt is also
convertible  into common stock of the Company at a conversion  rate of $4.75 per
share through  January 2003. The proceeds of $1,500,000  were allocated  between
the note and the fair  value of the  warrants  using the Black  Scholes  pricing
model. An additional  375,000  five-year  warrants were issued in April 2002 and
the fair value of the warrants was expensed as additional interest expense as of
December 31, 2002. The resulting original issue discount,  the fair value of the
warrants, and the beneficial conversion of the note payable into common stock as
defined  in EITF 00-27  "Application  of Issue No.  98-5 to Certain  Convertible
Instruments"(EITF 00-27), is being amortized over the life of the note using the
straight-line method, which approximates the interest method.




                                                                         Page 22
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


In February  2003, the Company  reached an agreement to convert  $962,000 of its
note payable with Pyramid  Trading  Limited  Partnership to equity and to extend
the due date to May 2004.  Terms of the  conversion  state that the note will be
converted to equity over a 14 month period at a price generally  equivalent to a
10% discount to market price. The Company issued an additional 253,000 five-year
warrants at an exercise  price of $1.00 with the note payable  extension.  These
warrants,  valued at $208,447 using the Black Scholes  pricing model,  are being
expensed over the remaining  term of the note  agreement.  During the year ended
December 31, 2003, the Company converted principal and accrued interest totaling
$828,172 into 717,741 shares of common stock.

During 2002, the Company borrowed $600,000 and issued a five-year warrant to one
of its  directors  to purchase  120,000  common  shares at $1.50 per share.  The
proceeds of $600,000 were  allocated  between the note and the fair value of the
warrants  using the Black Scholes  pricing model.  The resulting  original issue
discount,  the fair value of the warrants,  was being amortized over the life of
the note using the straight-line  method which approximates the interest method.
In December  2002,  the lender  converted the note payable into 60,000 shares of
Class E convertible  preferred stock. The remaining  unamortized  original issue
discount amount was expensed at the time of the conversion.

In  November  2003,  the Company  borrowed  $1,500,000  and issued a  three-year
warrant  to the  lender to  purchase  535,000  common  shares at $2.21 per share
through  November  2006. The debt is also  convertible  into common stock of the
Company at a  conversion  rate of $1.40 per share  through  November  2006.  The
proceeds of $1,500,000  were allocated  between the note, the intrinsic value of
the  conversion  option,  and the fair  value of the  warrants  using  the Black
Scholes pricing model. The resulting original issue discount,  the fair value of
the warrant, and the beneficial conversion of the note payable into common stock
as defined in EITF 00-27 is being  amortized over the life of the note using the
straight-line method, which approximates the interest method.

Interest  expense  related to long-term debt with related  parties for the years
ended  December 31, 2003,  2002,  and 2001 was  approximately  $0,  $228,000 and
$3,000, respectively.


--------------------------------------------------------------------------------
NOTE 8 - CAPITAL LEASE OBLIGATIONS
--------------------------------------------------------------------------------

The Company has lease financing facilities for property, equipment and leasehold
improvements.  Leases  outstanding  under these  agreements  bear interest at an
average rate of 8.25% and expires  through  October 2007.  The  obligations  are
secured by the property under lease. Total cost and accumulated  amortization of
the leased equipment was $428,749 and $221,432 at December 31, 2003 and $456,124
and  $219,332  at  December  31,  2002.  Amortization  expense  related to these
obligations is included in depreciation expense.




                                                                         Page 23
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


Future  minimum  capital  lease  payments  are as follows  for the years  ending
December 31:

<TABLE>
<CAPTION>
<S>                                                                 <C>
          2004                                                      $           69,556
          2005                                                                  69,556
          2006                                                                  56,457
          2007                                                                  34,610
                                                                    ------------------
          Total                                                                230,179
          Less: amounts representing interest                                 (32,342)
                                                                    ------------------
          Present value of future minimum lease payments                       197,837
          Less: current portion                                               (54,939)
                                                                    ------------------
          Capital lease obligations, net of current portion         $          142,898
                                                                    ==================
</TABLE>

--------------------------------------------------------------------------------
NOTE 9 - NOTE PAYABLE - STOCKHOLDER
--------------------------------------------------------------------------------

On June 30,  2003,  the Company  borrowed  $124,000  from a  stockholder  of the
Company with monthly payments of $5,600 including interest at 7.85%, due in June
2005, and  unsecured.  The balance due at December 31, 2003 is $114,391 of which
$81,554 is due in 2004 and $32,837 is due in 2005.  Interest  expense related to
this  note  payable -  stockholder  for the year  ended  December  31,  2003 was
approximately $1,600.

--------------------------------------------------------------------------------
NOTE 10 - STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

    Capital Stock Authorized

The articles of incorporation  authorize the Company to issue 50,000,000  shares
of no par  capital  stock.  Authorization  to  individual  classes  of stock are
determined by a Board of Directors  resolution.  The authorized classes of stock
at December  31, 2003 are the  following:  275,000  shares of Class A cumulative
convertible  preferred  stock,  60,000 shares of Class B cumulative  convertible
preferred  stock,  250,000  shares of Class C cumulative  convertible  preferred
stock,  250,000 shares of Class D cumulative  convertible  preferred  stock, and
400,000 shares of Class E cumulative convertible preferred stock.



                                                                         Page 24
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


    Cumulative Convertible Preferred Stock

Dividends  on  Class A,  Class B,  Class  C,  Class  D, and  Class E  cumulative
convertible  preferred  stock are cumulative  and payable  quarterly at 8%, 10%,
10%,  14%, and 15% per annum,  respectively.  Cumulative  convertible  preferred
stock can be converted  into common  shares at any time as follows:  Class A and
Class B - five shares,  Class C - two shares, Class D - two and one-half shares,
and Class E - eight shares.  The intrinsic  value of any  beneficial  conversion
option is recorded as preferred  stock  dividends at the time of preferred stock
issuance.  Dividends on Class B preferred are cumulative and payable  monthly at
10% per  annum.  The  dividends  are based on $10 per  share  for all  preferred
shares.  The Class B preferred was offered to certain note payable  holders at a
conversion  of  $10  per  Class  B  preferred  share.  All  preferred  stock  is
non-voting. Warrants to purchase shares of the Company's common stock were given
with the issuance of Class A, Class B, Class D, and Class E preferred  stock and
were valued at fair value using the Black  Scholes  pricing  model.  The Company
may, but is not obligated to, redeem the preferred stock at $10.50 per share for
Class A and Class B and  $10.00  per  share  for Class C,  Class D, and Class E,
whenever the Company's  common stock price exceeds certain  defined  criteria as
defined  in  the  preferred  stock  agreements.  Upon  the  Company's  call  for
redemption,  the holders of the preferred  stock called for redemption  have the
option to convert  each  preferred  share into  shares of the  Company's  common
stock.  Holders of preferred  stock  cannot  require the Company to redeem their
shares. The liquidation  preference is the same as the redemption price for each
class of preferred stock.

    Stock Compensation Plans

The Company has a 1999 Stock  Compensation  Plan,  which permits the issuance of
restricted stock and stock options to key employees and agents.  All outstanding
incentive stock options granted under the prior 1997 Stock Options Plan continue
until all agreements  have expired.  There are 2,500,000  shares of common stock
reserved for  issuance  through  restricted  stock,  non-qualified  stock option
awards and incentive  stock option awards.  The Plans also provide that the term
of each award be  determined  by the Board of  Directors.  Under the Plans,  the
exercise  price of incentive  stock options may not be less than the fair market
value of the stock on the award  date,  and the options  are  exercisable  for a
period not to exceed ten years from award date.

The Company also has a 2000 Non-employee Director Stock Compensation Plan, which
permits the  issuance of stock  options  for 300,000  shares of common  stock to
non-employee  directors.  The  exercise  price of the stock  options is the fair
market value of the stock on the award date, and the options are exercisable for
a period not to exceed ten years from award date.

    Employee Stock Purchase Plan

The Company has a 2000 Employee Stock  Purchase Plan,  which allows for the sale
of 400,000  shares of Company common stock to qualified  employees.  At December
31, 2003, no shares were issued under the Plan.



                                                                         Page 25
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


    Stock Subscriptions Receivable

The Company has stock  subscriptions  receivable  including interest  receivable
totaling $418,085 and $633,195 due to the Company at December 31, 2003 and 2002,
respectively,  from the issuance of common stock. Monthly interest only payments
at interest  ranging from 9% to 10% were required through December 2003 at which
time any unpaid  stock  subscription  receivable  was due. The  receivables  are
secured by the common  stock  issued.  At  December  31,  2003,  the Company has
reserved $71,000 related to stock  subscriptions and interest  receivable deemed
to be  uncollectible.  The Company does not record  interest  receivable  on the
outstanding receivable balance once they have determined it to be uncollectible.

    Restricted Stock

The Company awards  restricted common shares to selected  employees.  Recipients
are not required to provide any consideration other than services. Company share
awards are subject to certain  restrictions on transfer,  and all or part of the
shares  awarded  may be subject to  forfeiture  upon the  occurrence  of certain
events,  including  employment  termination.  The intrinsic value at the date of
grant related to the shares awarded is generally amortized over three years, the
vesting term of the awards. Compensation expense recorded during the years ended
December 31, 2003,  2002, and 2001 in connection  with the  amortization  of the
award cost was $47,119, $78,292 and $92,749, respectively.

Restricted stock activity is as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                       2003               2002                  2001
                                                -----------------   -----------------    -----------------
<S>                                             <C>                 <C>                  <C>
Outstanding, January 1                                     45,066             75,337               113,829
     Issued                                                    --             22,434                83,000
     Vested                                              (17,204)           (33,107)              (38,781)
     Forfeited                                           (10,843)           (19,598)              (82,711)
                                                -----------------   -----------------    -----------------
Outstanding, December 31                                   17,019             45,066                75,337
                                                =================   =================    =================
</TABLE>

    Stock Options

Stock option activity is as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                Options                            Weighted-Average Exercise Price
                             --------------------------------------------    ----------------------------------------
                                  2003            2002            2001           2003           2002           2001
                             -------------    ------------   ------------    ------------    -----------   -----------
<S>                          <C>              <C>            <C>             <C>             <C>           <C>
Outstanding, January 1           1,093,157       1,050,024      1,145,507    $       2.45    $      2.55   $      2.31
     Granted                       747,775         249,300        839,500            1.35           0.96          1.20
     Exercised                     (3,000)              --      (615,933)            1.25             --          0.51
     Forfeited                   (180,500)       (206,167)      (319,050)            4.49           1.86          2.11
                             -------------    ------------   ------------    ------------    -----------   -----------
Outstanding, December 31         1,657,432       1,093,157      1,050,024    $       1.81    $      2.45   $      2.55
                             =============    ============   ============    ============    ===========   ===========
</TABLE>

The  weighted-average  grant-date fair value of options granted during the years
ended  December  31,  2003,   2002,  and  2001  was  $1.20,   $0.86  and  $2.94,
respectively.


                                                                         Page 26
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


Options outstanding and exercisable as of December 31, 2003, are as follows:

<TABLE>
<CAPTION>
                                               Outstanding                                   Exercisable
                           ----------------------------------------------------  -------------------------------------
                                                      Weighted - Average
                                                  ----------------------------
                                                                   Remaining                             Weighted-
     Range of Exercise                              Exercise      Contractual                             Average
           Price                  Options            Price        Life-Years          Options         Exercise Price
---------------------------  -----------------     ----------    -------------   -----------------   ---------------
<S>                          <C>                   <C>           <C>             <C>                  <C>
            $.60                       255,000     $    0.60             6.43              255,000    $         0.60
       $.93   to     $1.38             409,800          1.15             9.18              256,433              1.24
      $1.43   to     $2.08             688,766          1.67             7.90              620,658              1.68
      $2.50   to     $2.88             140,000          2.67             6.81              140,000              2.67
      $3.98   to     $5.38             109,666          4.48             6.67               92,166              4.57
      $6.00   to     $6.75              54,200          6.60             6.24               46,900              6.57
                             -----------------     ----------    -------------   -----------------    --------------
       $.60   to     $6.75           1,657,432     $    1.81             7.76            1,411,157    $         1.85
                             =================     ==========    =============   =================    ==============
</TABLE>

    Stock Warrants

Stock warrants activity is as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                            Outstanding                           Weighted - Average Exercise Price
                             --------------------------------------------    -----------------------------------------
                                 2003             2002           2001            2003           2002           2001
                             -------------    ------------   ------------    ------------    -----------   -----------
<S>                          <C>              <C>            <C>             <C>             <C>           <C>
Outstanding, January 1           4,327,396       9,564,450      8,093,464    $       2.05    $      2.37   $      8.71
     Granted                     3,687,447       2,546,690      9,483,530            1.53           1.46          2.32
     Exercised                   (556,881)              --            --             1.53             --            --
     Forfeited                    (36,088)     (7,783,744)    (8,012,544)            3.59           2.25          8.75
                             -------------    ------------   ------------    ------------    -----------   -----------
Outstanding, December 31         7,421,874       4,327,396      9,564,450    $       1.83    $      2.05   $      2.37
                             =============    ============   ============    ============    ===========   ===========
</TABLE>

The weighted-average  grant-date fair value of warrants granted during the years
ended December 31, 2003, 2002 and 2001 was $1.10, $1.00 and $1.79, respectively.

Warrants outstanding and exercisable as of December 31, 2003, are as follows:

<TABLE>
<CAPTION>
                                                      Weighted - Average
                                               ----------------------------------
                                                                    Remaining
   Range of Exercise                           Exercise Price      Contractual
        Prices                 Warrants                            Life-Years
------------------------  -------------------  ---------------   ----------------
<S>                       <C>                  <C>               <C>
       $.85 to    $1.25           2,465,997     $        1.02              4.13
      $1.50 to    $2.25           3,946,432              1.90              2.49
      $2.40 to    $3.56             501,025              2.52              3.15
      $4.00 to    $5.20             508,420              4.16              2.45
                          -----------------     -------------    --------------
       $.85 to    $5.20           7,421,874     $        1.83              3.08
                          =================     =============    ==============
</TABLE>





                                                                         Page 27
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


Stock warrants issued for the years ended December 31 were awarded for:

<TABLE>
<CAPTION>
                                                      2003                 2002                 2001
                                                -----------------   -----------------    -----------------
<S>                                             <C>                 <C>                  <C>
Warrant repricing                                              --                 --             8,012,544
Common stock                                            1,812,259            728,357               441,642
Services rendered                                         941,288            103,333               455,756
Preferred stock                                           145,900            420,000                48,588
Debt issuance and guarantees                              788,000          1,295,000               525,000
                                                -----------------   -----------------    -----------------
                                                        3,687,447          2,546,690             9,483,530
                                                =================   =================    =================
</TABLE>

During the year ended December 31, 2003,  298,091 warrants were exercised with a
weighted average exercise price of $1.05. Based on the warrant agreements, these
warrants  were  exercised  in lieu of cash  with the  warrant  holder  receiving
141,529 shares of common stock.

During the year ended December 31, 2003,  the Company  issued 400,000  five-year
warrants with a weighted-average exercise price of $0.85 for services related to
investor  relations.  These  warrants  were valued at  $321,920  using the Black
Scholes  pricing  model.  During  2003,  the Company  issued  541,288  five-year
warrants with a weighted-average exercise price of $1.02 for services related to
equity financing.

During the year ended December 31, 2002,  the Company  issued  103,333  three-to
five-year warrants with a weighted-average  exercise price of $1.56 for services
related to equity financing.

During the year ended  December  31, 2001,  the Company  issued  455,756  one-to
five-year warrants with a weighted-average  exercise price of $2.16 for services
related to equity  financing.  During 2001,  the Company  issued  48,588  two-to
five-year warrants with a weighted-average  exercise price of $3.69 for services
related to  preferred  stock  financing  which were valued at $87,403  using the
Black Scholes pricing model.

On August 2,  2001,  the  Company  approved  the  repricing  of all  outstanding
warrants  issued at $8.75 to $2.25.  The  expiration  date of these warrants was
extended to October 11, 2002. The Company recorded $6,919,692 to the accumulated
deficit  related to the change in warrant value using the Black Scholes  pricing
model.

All warrants were recorded at fair value using the Black Scholes pricing model.

The fair value of stock  warrants is the  estimated  present value at grant date
using  the Black  Scholes  pricing  model  with the  following  weighted-average
assumptions:

<TABLE>
<CAPTION>
                                        2003                  2002                  2001
                                 ------------------    ------------------    -----------------
<S>                              <C>                   <C>                   <C>
Risk-free interest rate                      2.37%                 3.90%                 5.30%
Expected life                            3.4 years             4.5 years             4.5 years
Expected volatility                           170%                151.3%                 94.3%
Expected dividend rate                          0%                    0%                    0%
</TABLE>





                                                                         Page 28
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001




-------------------------------------------------------------------------------
NOTE 11 - INCOME TAXES
-------------------------------------------------------------------------------

The  Company  has  generated   federal  and  state  net   operating   losses  of
approximately  $23,469,000 and  $10,382,000,  respectively,  which, if not used,
will begin to expire in 2004. Future changes in the ownership of the Company may
place limitations on the use of these net operating loss carryforwards.

The Company has  recorded a full  valuation  allowance  against its deferred tax
asset due to the  uncertainty of realizing the related  benefits.  The change in
the valuation allowance was $1,722,000,  $402,000,  and $1,757,200 for the years
ended December 31, 2003, 2002 and 2001, respectively.

Components of net deferred income taxes are as follows at December 31:

                                                        2003           2002
                                                 -----------    -----------
Deferred income tax assets:
     Net operating loss carryforwards            $ 9,387,000    $ 7,633,000
     Goodwill                                         65,000         90,000
     Asset valuation reserves                        285,000        231,000
     Accrued liabilities                              55,000         69,000
                                                 -----------    -----------
                                                   9,792,000      8,023,000
Less valuation allowance                          (9,674,000)    (7,952,000)
                                                 -----------    -----------
                                                     118,000         71,000
Deferred income tax liabilities - depreciation      (118,000)       (71,000)
                                                 -----------    -----------
Net deferred income tax assets                   $        --    $        --
                                                 ===========    ===========

Income tax computed at the federal  statutory  rate  reconciled to the effective
tax rate is as follows for the years ended December 31:

                                        2003       2002       2001
                                      ------     ------     ------
Federal statutory tax rate benefits    (35.0)%    (35.0)%    (35.0)%
State tax, net of federal benefit       (5.0)      (5.0)      (5.0)
Change in valuation allowance           39.6       36.1       33.0
Other                                    0.4        3.9        7.0
                                      ------     ------     ------
Effective tax rate                       0.0%       0.0%     0.0 %
                                      ======     ======     ======














                                                                         Page 29
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001


The Company has the following net operating loss  carryforwards  at December 31,
2003, for income tax purposes:


                                   Federal Net      State Net
            Year of Expiration   Operating Loss     Operating
            ------------------   --------------     ---------
                                                      Loss
                                                      ----
                   2004            $ 1,050,000   $ 1,050,000
                   2005                599,000       599,000
                   2007                501,000       501,000
                   2008                 59,000        57,000
                   2009                 22,000        22,000
                   2011                595,000       575,000
                   2012                 25,000            --
                   2018              1,122,000     1,096,000
                   2019              1,585,000       992,000
                   2020              4,839,000     1,587,000
                   2021              4,726,000     1,435,000
                   2022              4,353,000     1,230,000
                   2023              3,993,000     1,238,000
                                   -----------   -----------
                                   $23,469,000   $10,382,000
                                   ===========   ===========

Under Internal Revenue Code Section 382,  utilization of federal losses expiring
prior to 2019 are limited to approximately $375,000 each year.




                                                                         Page 30
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



--------------------------------------------------------------------------------
NOTE 12 - SUPPLEMENTAL CASH FLOWS INFORMATION
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         2003         2002         2001
                                                      ----------   ----------   ----------
<S>                                                   <C>          <C>          <C>
Cash paid for interest                                $  436,061   $  512,167   $1,286,155
Noncash investing and financing transactions:
    Repricing of warrants                                     --           --    6,919,692
    Stock options issued below fair market value              --           --    1,244,250
    Stock options issued for commissions earned               --       53,745           --
    Stock subscriptions receivable received for
        stock                                                 --           --      610,000
    Issuance of preferred and common stock for
       acquisition of assets                              76,500       18,590      386,000
    Current liabilities converted to stock               192,690       59,755      225,613
    Common stock issued for guarantee of debt                 --       14,750      120,000
    Issuance of stock for intangible asset                    --           --       83,750
    Purchase of customer lists and equipment
       through payable to Florida Cable                  465,000           --           --
    Notes payable and accrued interest converted
       to common and preferred stock                     828,172    1,164,882      227,009
    Capitalized lease equipment purchases                     --      174,986           --
    Conversion of preferred stock to common stock         40,000      150,000      528,742
    Conversion of preferred stock into note payable           --      400,000           --
    Reduction of stock subscription receivable
       related to commission earned on equity
       transactions                                       36,977       40,563           --
    Warrants issued related to modifications of
       long-term debt                                    208,447      528,650           --
    Conversion of preferred stock dividends into
       common stock                                      113,209           --           --
</TABLE>

--------------------------------------------------------------------------------
NOTE 13 - RETIREMENT SAVINGS PLAN
--------------------------------------------------------------------------------

The Company has 401(k) profit sharing plan covering  substantially all full-time
employees. Employee contributions are limited to the maximum amount allowable by
the Internal Revenue Code. The Company made no discretionary  contributions  for
any of the years presented.









                                                                         Page 31
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



-------------------------------------------------------------------------------
NOTE 14 - COMMITMENTS AND CONTINGENCIES
-------------------------------------------------------------------------------

    Operating leases

Office  space was leased from an LLC which an officer of the Company was partial
owner of through  August 2003.  In addition to basic  monthly rents ranging from
$16,640 to $17,653,  the Company paid building  maintenance  costs,  real estate
taxes and  assessments.  During 2003, the Company  converted  $72,000 of accrued
rent into 7,200  shares of Class C preferred  stock.  At  December  31, 2003 and
2002,  accrued  rent of $56,560  and  $141,060,  respectively,  was owed to this
related party.  In August 2003, the Company signed a new lease agreement with an
unrelated party disclosed below.

The Company has various other operating  leases for its corporate  office space,
vehicles and various  equipment  with lease terms  expiring in August 2017.  The
monthly base rents range from $69,736 to $83,325,  net of payments received from
subleases.  In July 2003,  the Company  entered  into an agreement to sublease a
portion of their office space through August 2008 for  approximately  $5,000 per
month.The leases contain provisions for payments of real estate taxes, insurance
and common area costs.

Total  rent  expense  for the  years  ended  December  31,  2003,  2002 and 2001
including  common area costs and real estate taxes was  approximately  $578,000,
$566,000 and  $689,000,  respectively.  Rent  expense  with related  parties for
December 31, 2003, 2002, 2001 was approximately $59,000,  $462,000 and $561,000,
respectively.

Future minimum rental payments, net of payments received from subleases,  are as
follows for the years ending December 31:

                           Year                 Amount
                           -----         -----------------
                           2004          $         534,000
                           2005                    512,000
                           2006                    516,000
                           2007                    541,000
                           2008                    587,000
                        Thereafter               4,509,000
                                         -----------------
                                         $       7,199,000
                                         =================

    Legal proceedings

The Company is involved in legal actions in the ordinary course of its business.
Although the outcome of any such legal actions  cannot be predicted,  management
believes  that there is no pending  legal  proceedings  against or involving the
Company for which the outcome is likely to have a material  adverse  effect upon
the Company's  consolidated financial position,  results of operations,  or cash
flows.






                                                                         Page 32
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



--------------------------------------------------------------------------------
NOTE 15 - SIGNIFICANT CUSTOMERS AND SUPPLIERS
--------------------------------------------------------------------------------

One customer  represented  approximately  16%,  13%, and 15% of revenues for the
years ended December 31, 2003, 2002, and 2001, respectively.

The Company  purchased  materials from major suppliers  approximately as follows
for the years ended December 31:

                                                  Supplier
                                ----------------------------------------------
                                     A                B               C
                                -------------   --------------   -------------
                         2003       61%              4%               8%
                         2002       58%              6%              12%
                         2001       38%              19%             12%

The Company had revenues from companies that are associated with a director, who
was elected to the board of directors during 2003, of approximately  $1,124,000,
$636,000,  and $0 for the  years  ended  December  31,  2003,  2002,  and  2001,
respectively.  In addition, the Company had accounts receivable outstanding from
these  companies of  approximately  $142,000,  $171,000,  and $0 at December 31,
2003, 2002, and 2001, respectively.

--------------------------------------------------------------------------------
NOTE 16 - BUSINESS SEGMENTS
--------------------------------------------------------------------------------

The CTU subsidiary  functions as one segment for integrated  voice,  video, data
networking and computer technologies products and services, under one management
structure,  with one  management  financial  reporting  system,  and  having one
unified marketing name.

With the start up of Multiband in February  2000,  the Company added the segment
providing voice, data, and video services to residential  multi-dwelling  units.
MB USA's business model is similar to Multiband.

Segment disclosures are as follows:
<TABLE>
<CAPTION>
                                                                   Multiband/
                                      Vicom             CTU          MB USA           Total
                                    ----------        --------     ----------      ----------
Year Ended December 31, 2003:
<S>                                <C>            <C>             <C>            <C>
   Revenues                        $        --    $ 21,199,303    $ 1,441,118    $ 22,640,421
   Loss from operations             (1,941,271)       (339,369)    (1,215,667)     (3,496,307)
   Identifiable assets               5,691,867       5,254,221      2,956,797      13,902,885
   Depreciation and amortization        45,789         432,364        518,226         996,379
   Capital expenditures                 13,342         424,047         89,547         526,936
</TABLE>






                                                                         Page 33
<PAGE>


                      VICOM, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002 and 2001



<TABLE>
<CAPTION>
                                                              Vicom           CTU          Multiband        Total
                                                            ---------       ---------      ---------      ----------
<S>                                                       <C>            <C>             <C>            <C>
Year Ended December 31, 2002:
   Revenues                                               $        --    $ 23,963,748    $   577,221    $ 24,540,969
   Income (loss) from operations                           (1,810,241)        172,689     (1,195,521)     (2,833,073)
   Identifiable assets                                      3,151,891       5,282,233      1,913,192      10,347,316
   Depreciation and amortization                              142,426         482,390        490,641       1,115,457
   Capital expenditures                                         2,126         814,464        458,844       1,275,434


                                                              Vicom           CTU          Multiband        Total
                                                            ---------       ---------      ---------      ----------
Year Ended December 31, 2001:
   Revenues                                               $        --    $ 32,011,187    $   249,590    $ 32,260,777
   Loss from operations                                    (2,079,592)       (299,553)    (1,618,003)     (3,997,148)
   Identifiable assets                                      3,171,968       5,786,796      3,250,917      12,209,681
   Depreciation and amortization                              418,655         550,075        442,034       1,410,764
   Capital expenditures                                         6,900         491,532      1,386,513       1,884,945
</TABLE>

Segment  disclosures are provided by entity to the extent  practicable under the
Company's accounting system.

--------------------------------------------------------------------------------
NOTE 17 - SUBSEQUENT EVENTS
--------------------------------------------------------------------------------

On January 1, 2004,  the Company  entered into a stock  purchase  agreement with
URON, Inc. (URON) to purchase all of the outstanding capital stock of URON for a
total  purchase  price of 350,000  shares of the  Company's  common  stock to be
issued in  installments  as follows:  a) 180,000  shares  issued at closing,  b)
170,000  shares held in escrow.  The common shares issued to URON were valued at
fair market value on the date of the  agreement  which was $1.31 per share for a
purchase  price of  $458,500.  The terms of the  escrow are as  follows:  50,000
shares to be  released  upon  URON  providing  the  Company  with  documentation
satisfactory  to the Company of a release  from a certain  vendor or any related
entity of all liabilities  incurred to a certain vendor by URON;  120,000 shares
to be  released  in  40,000  share  increments  upon the  Company's  receipt  of
distributable  gross profits,  generated by certain customers,  in increments of
$75,000  cash.  The escrow shall be  terminated  24 months after the date of the
agreement  and any shares not released  will be  rescinded  to the Company.  The
Company  must  register  all  shares  issued  within  one year  from the date of
issuance.  The  reason for the  purchase  of URON is to  continue  to expand the
Company's  services  related to voice,  data and video services.  The Company is
acquiring  the  customer  lists of URON and will be  amortizing  them over their
estimated useful lives of three years.

In January  2004,  the Company  purchased  the remaining 50% ownership of MB USA
from Pace, by issuing 30,000 shares of common stock valued at $39,300 (Note 2).






                                                                         Page 34
<PAGE>


           REPORT OF INDEPENDENT AUDITORS ON SUPPLEMENTARY INFORMATION




To Stockholders, Board of Directors, and Audit Committee
Vicom, Incorporated and subsidiaries
New Hope, Minnesota



Our  report on our  audits of the basic  consolidated  financial  statements  of
Vicom, Incorporated and subsidiaries for the years ended December 31, 2003, 2002
and 2001  appears on page 1. The audits  were made for the purpose of forming an
opinion on the basic  consolidated  financial  statements  taken as a whole. The
supplementary  information  on page 36 is presented  for purposes of  additional
analysis  and  is  not a  required  part  of the  basic  consolidated  financial
statements.  Such  information  has been  subjected to the  auditing  procedures
applied in the audits of the basic consolidated financial statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
consolidated financial statements taken as a whole.

                                              /s/ VIRCHOW, KRAUSE & COMPANY, LLP


Minneapolis, Minnesota
February  16, 2004

























                                                                         Page 35
<PAGE>




<TABLE>
<CAPTION>
                                                    VICOM, INCORPORATED AND SUBSIDIARIES

                                                     VALUATION AND QUALIFYING ACCOUNTS
                                                 YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
-----------------------------------------------------------------------------------------------------------------------------------

                                  Column A                  Column B          Column C            Column D             Column E
-----------------------------------------------------   ----------------- ----------------  ---------------------   ---------------

                                                                             Additions
                                                                             Charged to
                                                           Balance at        Costs and                               Balance at End
                                Description             Beginning of Year     Expenses        Deductions                of Year
-----------------------------------------------------   ----------------- ----------------  ---------------------   ---------------
<S>                                                     <C>               <C>               <C>                     <C>
ALLOWANCE DEDUCTED FROM ASSET TO WHICH IT APPLIES
Allowance for doubtful accounts receivable:
     2003                                               $        236,000  $             --  $         13,000  (A)   $    223,000
     2002                                                        178,000            58,000                --             236,000
     2001                                                        159,000           141,000           122,000  (A)        178,000
Notes receivable:
     2003                                                         30,000                --            30,000  (A)             --
     2002                                                             --            30,000                --              30,000
     2001                                                             --                --                --                  --
Stock subscriptions and interest receivable
     2003                                                             --            71,000                --              71,000
     2002                                                             --                --                --                  --
     2001                                                             --                --                --                  --

   (A) Write-off uncollectible receivables
</TABLE>
















                                                                         Page 36
<PAGE>



ITEM 9.

CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND  FINANCIAL
DISCLOSURE

         None

ITEM 9A.

CONTROLS AND PROCEDURES.

     The  Company,  under  the  supervision  and with the  participation  of its
management,  including the Chief Executive Officer,  evaluated the effectiveness
of  the  design  and  operation  of  the  Company's   "disclosure  controls  and
procedures" (as defined in Rule 13a-15(e)  under the Securities  Exchange Act of
1934 (the  Exchange  Act)) as of the end of the period  covered by this  report.
Based  on that  evaluation,  the  Chief  Executive  Officer  concluded  that the
Company's  disclosure  controls and  procedures  are  effective in timely making
known to him  material  information  relating to the  Company and the  Company's
consolidated  subsidiaries  required to be  disclosed in the  Company's  reports
filed or  submitted  under  the  Exchange  Act.  There has been no change in the
Company's  internal  control over financial  reporting  during the quarter ended
December  31, 2003 that has  materially  affected,  or is  reasonably  likely to
materially affect, the Company's internal control over financial reporting.

    Management is aware that there is a lack of segregation of duties due to the
small number of employees  dealing with  general  administrative  and  financial
matters. However, management has decided that considering the employees involved
and the  control  procedures  in  place,  risks  associated  with  such  lack of
segregation are insignificant and the potential  benefits of adding employees to
clearly  segregate  duties do not  justify  the  expenses  associated  with such
increases.

PART III


ITEM 10.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS AND CONTROL PERSONS OF THE
REGISTRANT

         Information with respect to the directors and executive officers of the
Company  set  forth  under  "Information  Concerning  Directors,   Nominees  and
Executive  Officers" and under "Compliance with Section 16 (a) "in the Company's
definitive  proxy statement for the annual meeting of shareholders to be held on
or about June 19, 2004, is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information  with  respect to  Executive  Compensation  set forth under
"Executive  Compensation"  in the Company's  definitive  proxy statement for the
annual  meeting  of  shareholders  to be  held  on or  about  June  19,  2004 is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information  with respect to security  ownership of certain  beneficial
owners and  management,  set forth  under  "Beneficial  Ownership  of  Principal
Shareholders and Management" in the Company's definitive proxy

<PAGE>

statement for the annual meeting of shareholders to be held on or about June 19,
2004, is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information   with  respect  to  certain   relationships   and  related
transactions,  set forth under "Information  Concerning Directors,  Nominees and
Executive  Officers" in the Company's  definitive proxy statement for the annual
meeting of  shareholders  to be held on or about June 19, 2004, is  incorporated
herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The Audit Commitee of the Company selected  Virchow,  Krause & Company,
LLP  ("Virchow   Krause"),   certified   public   accountants  with  offices  in
Minneapolis,  Minnesota,  to audit the Company's  financial  statements  for the
years ended December 31, 2003,  2002 and 2001.  The following  table details the
fees paid to Virchow Krause for the years ended December 31, 2003 and 2002.

                       2003         2002
                     -------      -------
Audit Fees           $60,929      $66,181
Audit-Related Fees     2,150 (1)      750 (1)
Tax Fees              15,000       11,750
All Other Fees         1,705 (2)      155 (2)
------------------   -------      -------
Total                $79,784      $78,836
                     =======      =======

(1) Fees related to review of Form S-3 Filings
(2) Fees related to miscellaneous research projects

         The Company's Audit committee consists of Frank Bennett, Jonathan Dodge
and Donald Miller.  All three are considered audit committee  financial  experts
independent  from managers.  The Company's  current audit  committee  charter is
filed herewith as exhibit 3.5. The audit  committee is responsible  for engaging
the audit firm and fees related to their services.

         The  policy  of  the  Company's   audit  committee  is  to  review  and
pre-approve both audit and non-audit  services to be provided by the independent
auditors (other than with de minimis exceptions  permitted by the Sarbanes-Oxley
Act of 2002).  This duty may be delegated to one or more  designated  members of
the audit  committee  with such  approval  reported to the committee at its next
regularly  scheduled meeting.  Approval of non-audit services shall be disclosed
to investors in periodic  reports  required by section  13(a) of the  Securities
Exchange Act of 1934. Approximately 95 % of the fees paid to Virchow Krause were
pre-approved by the audit committee.

         No  services in  connection  with  appraisal  or  valuations  services,
fairness  opinions  or  contribution-in-kind  reports  were  rendered by Virchow
Krause.  Furthermore,  no work of Virchow  Krause with  respect to its  services
rendered to the Company was performed by anyone other than Virchow Krause.


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.


A.       EXHIBITS


<PAGE>

            Exhibit 3.5 states Vicom's code of ethics for its senior officers. A
            copy of said code will be provided upon written request. Any waivers
            or  amendments  to said code will be posted to  Vicom's  website  or
            disclosed in an 8K filing.

            Exhibit 3.6 provides Vicom's Audit committee charter

        B.  REPORTS ON FORM 8K

            The  Company  filed  reports on Form 8K on  September  24,  2003 and
December 16, 2003.


            Exhibits

See Index to Exhibits on page 51 of this report.


<PAGE>


                                   SIGNATURES

         Pursuant  to  the  requirements  of  Section  13 or  Section  15(d)  of
Securities Exchange Act of 1934, the registrant has duly caused this 10-K Report
to be signed on its behalf by the undersigned, thereunto duly authorized.

                        VICOM, INC.
                        Registrant
Date: March 30, 2004    By:

                                              /s/ James L. Mandel
                                            Chief Executive Officer
Date: March 30, 2004    By:

                                               /s/ Steven M. Bell
                                            Chief Executive Officer
                                  (Principal Financial and Accounting Officer)

         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.


<PAGE>


INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO.        DESCRIPTION
<S>                <C>
2.1                Asset Purchase Agreement and related documents with Enstar Networking Corporation dated December 31, 1998(1)
2.2                Agreement and Plan of Merger with Ekman, Inc. dated December 29, 1999(1)
3.1                Amended and Restated Articles of Incorporation of Vicom, Inc.(1)
3.2                Restated Bylaws of Vicom, Incorporated(1)
3.3                Articles of Incorporation of Corporate Technologies, USA, Inc.(1)
3.5                Audit Committee Charter (9)
4.1                Certificate of Designation of the Relative Rights, Restrictions and Preferences of 8% Class A Cumulative
                   Convertible Preferred Stock and 10% Class B Cumulative Convertible Preferred Stock dated December 9, 1998(1)
4.2                Form of Warrant Agreement(1)
4.3                Warrant Agreement with James Mandel dated December 29, 1999(1)
4.4                Warrant Agreement with Marvin Frieman dated December 29, 1999(1)
4.5                Warrant Agreement with Pierce McNally dated December 29, 1999(1)
4.6                Warrant Agreement with Enstar, Inc. dated December 29, 1999(1)
4.7                Warrant Agreement with David Ekman dated December 29, 1999(1)
4.8                Certificate of Designation of the Relative Rights, Restrictions and Preferences of 10% Class C Cumulative
                   Convertible Stock(2)
4.9                Certificate of Designation of the Relative Rights, Restrictions and Preferences of 14% Class D Cumulative
                   Convertible Stock(2)
4.10               Certificate of Designation of the Relative Rights, Restrictions and Preferences of 15% Class E Cumulative
                   Convertible Stock(2)
4.11               Securities Purchase Agreement Dated September 18, 2003 (6)
4.12               Secured Convertible Note Agreement (7)
4.13               Wholesale Services Agreement Dated March 4, 2004 (8)
5.1                Opinion of Steven M. Bell, Esq.(6)
10.1               Vicom Lease with Marbell Realty dated June 20, 1996(1)
10.2               Employment Agreement with Marvin Frieman dated October 1, 1996(1)
10.3               Employment Agreement with Steven Bell dated October 1, 1996(1)
10.4               Employment Agreement with James Mandel dated August 14, 1998(1)
10.5               Vicom Associate Agreement with NEC America, Inc. dated June 1999(1)
10.6               Loan Agreement with Wells Fargo dated June 17, 1999(1)
10.7               Employment Agreement with David Ekman dated December 29, 1999(1)
10.8               Debenture Loan Agreement with Convergent Capital dated March 9, 2000(1)
10.9               Corporate Technologies, USA, Inc. lease with David Ekman dated January 19, 2000(1)
10.10              Amendment dated July 11, 2000 to debenture loan agreement with Convergent Capital dated March 9, 2000.(2)
10.11              Corporate Technologies agreement with Siemens dated December 14, 2001(4)
10.12              Note with Pyramid Trading, L.P. (4)
10.14              Employment Agreement of Steven M. Bell dated January, 1, 2002(5)
10.15              Employment Agreement of James Mandel dated January 1, 2002(5)
14                 Vicom Code of Ethics for Senior Officers (9)
19.1               2000 Non-Employee Director Stock Compensation Plan (3)
19.2               2000 Employee Stock Purchase Plan (3)
21.1               List of subsidiaries of the registrant(1)
23                 Consent of Virchow, Krause & Company, LLP (9)
24.1               Power of Attorney (included on signature page of original registration statement)
31.1               Rule 13a-14 (s) Certification of Chief Executive Officer - James Mandel (9)
31.2               Rule 13a-14 (s) Certification of Chief Financial Officer -  Steven Bell (9)
32.1               Section 1350 of Sarbanes-Oxley Act of 2002 - James Mandel (9)
32.2               Section 1350of Sarbanes-Oxley Act of 2002 - Steven Bell (9)
</TABLE>

(1)  Previously  filed  as the same  exhibit  to the  Registrant's  Registration
Statement on Form 10, as amended.

(2) Previously filed as the same exhibit to the original Registration  Statement
on Form S-1 filed on August 11, 2000 and declared effective on August 18, 2000.

(3) Previously filed as the same exhibit to Registrant's Proxy Statement on Form
14A, filed on July 31, 2000.

(4) Previously filed as the same exhibit to the original Registration  Statement
on Form S-1 filed on August 15, 2001 and declared effective on August 20, 2001.

(5) Previously filed as the same exhibit to Registrant's Form 10-Q filed May 15,
2002

(6)  Previously  filed as the  same  exhibit  to  Registrant's  Form  8-K  filed
September 24, 2003.

(7) Previously filed as the same exhibit to Registrant's Form 8-k filed December
16, 2003.

(8) Previously  filed as the same exhibit to  Registrant's  Form 8-k filed March
17,2004.

(9) Filed herewith