U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-KSB

[X]  Annual report pursuant to section 13 or 15(d) of the Securities Exchange
                                   Act of 1934
                   for the fiscal year ended December 31, 2001

[ ]  Transition report pursuant to section 13 or 15(d) of the Securities
                      Exchange Act of 1934 [No fee required]
            for the transition period from ___________ to  ___________

                                    333-68998
                                    ---------
                              (Commission File No.)

                             VISCOUNT SYSTEMS, INC.
                             ----------------------
               (Exact name of registrant as specified in charter)

                                     NEVADA
                                     ------
         (State or other jurisdiction of incorporation or organization)

                                      3669
                                      ----
            (Primary Standard Industrial Classification Code Number)

                                   88-0498783
                                   ----------
                           (I.R.S. Employer I.D. No.)

   4585 Tillicum Street, Burnaby, British Columbia, Canada, V6C 1Z7, Tel:
   ----------------------------------------------------------------------------
                                 (604) 327-9446
                                 --------------
   (Address, including zip code, and telephone number of registrant's principal
                               executive offices)

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

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock,  $.001 per share

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  No [ ]

The registrant's consolidated revenues for its most recent fiscal year were
$2,056,459 (converted from $3,238,518 Canadian Dollars using an exchange rate of
US$0.635/Cdn.$).

As of March 26, 2002, the aggregate market value of the voting common equity
held by non-affiliates of the registrant was $7,293,000, based on the closing
trade reported on the NASD Over-the-Counter Bulletin Board quotation system.
Shares of Common Stock held by each officer and director and by each person who
owns 5% or more of the outstanding Common Stock have been excluded from this
calculation as such persons may be considered to be affiliated with the Company.

As of March 26, 2002, the registrant's outstanding common stock consisted of
15,100,000 shares.

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                     DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders are incorporated by reference into Part III of this Form 10-KSB
Report, which Proxy Statement is to be filed within 120 days after the end of
the Registrant's fiscal year ended December 31, 2001.



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                                   Form 10-KSB
                               Table of Contents

Part   Item No.
----   --------

I        1       Description of Business

         2       Description of Property

         3       Legal Proceedings

         4       Submission of Matters to a Vote of Security Holders

II       5       Market for Common Equity and Related Stockholder Matters

         6       Management's Discussion and Analysis

         7       Financial Statements

         8       Changes in and Disagreements with Accountants on Accounting and
                 Financial Disclosure

III     10       Directors and Officers of the Registrant

        11       Executive Compensation

        12       Security Ownership of Certain Beneficial Owners

        13       Certain Relationships and Related Transactions

IV      14       Exhibits, Financial Statement Schedules and Reports on Form 8-K

                 Signatures

                 Index to Consolidated Financial Statements

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                                     FORM 10-KSB

                                 VISCOUNT SYSTEMS, INC.


PART I.

Item 1. DESCRIPTION OF THE BUSINESS

GENERAL

We are a provider of access control security products. The current access
control product line consists of Enterphone 2000, a building intercom;
Entercheck, a card access system; RadioClik, radio frequency remote controls;
Elektra, liquid crystal display intercom panels; and closed circuit TV cameras.

We are also in the process of completing the development of our MESH (Multimedia
Embedded Security Hub) technology, which is currently scheduled for commercial
release in mid 2002. MESH is a proprietary software based access control
security technology. The MESH technology was previously referred to as JEDI
(Java Embedded Distributed Intelligence) in our filings with the SEC.

We were incorporated on May 24, 2001 under the laws of the State of Nevada. Our
subsidiary, Viscount Communication and Control Systems Inc. was incorporated in
1997 under the laws of the British Columbia, Canada, for the purposes of
carrying on our present access control business. We acquired all of the issued
and outstanding shares in the capital of Viscount Communication on July 27,
2001, thereby making it our wholly owned subsidiary. The substantive operations
of our business are conducted by our subsidiary, while the parent company
provides certain administrative and strategic decision making functions.

Except where otherwise indicated, all dollar amounts in this annual report on
Form 10-KSB are in Canadian dollars, which is our primary operating currency.

BUSINESS OVERVIEW

We design, produce and sell intercom and door access control systems. These
systems use telecommunications wiring to control access to buildings and other
facilities for security purposes. Our primary product is sold under the
brand-name Enterphone 2000. The Enterphone 2000 is a building access control
system that uses a building's internal phone wiring thereby avoiding use of
telephone utility services. Our products include access control panels that use
the Enterphone 2000 technology. Our control panels are typically installed at
entrances to apartment buildings or other controlled access buildings. The
control panels are sold in various formats and with varying features and
capabilities. Our Enterphone 2000 technology control panels are sold through an
established distribution network, and can be found installed in approximately
30,000 buildings throughout North America. We also package and sell access
control and security products that are complementary to our Enterphone 2000
product, including card access systems, radio frequency remote controls,
intercom monitors and closed circuit cameras.

While our current revenues are derived from sales of the Enterphone 2000
technology and related security products, we are developing a new building
access control and communications technology which we expect will be a
significant new source of revenues. This new technology will be marketed under
the brand-name MESH (Multimedia Embedded Security Hub). The MESH technology is
based on a proprietary software platform that can be used for a variety of
security and access control applications as well as communications functions.
The technology represents a departure from traditional access control and
security systems. Traditional systems use controllers that have a capacity to
control from 1 to 8 access points per controller. A building access system using
the MESH technology can control several hundred points of access from a single
hardware and software platform. The technology also allows several previously
independent building control systems to be hosted on a single hardware and
software platform. The first application of the MESH technology that we are
developing is a high security card access control and intercom system. Our

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proprietary MESH software is designed to be modular such that additional
applications can be added as modules that will permit the operation of other
building and area control systems and high technology requirements.

COMPANY HISTORY

Our current business is operated primarily through our wholly owned subsidiary
Viscount Communication. The business of our subsidiary began operations in 1969
as a manufacturer of video switching equipment. In 1970, the business was
acquired by B.C. Telecom Inc. (BC Tel), recently renamed Telus Corporation. BC
Tel was the telephone utility for British Columbia, Canada controlled by GTE
Corporation (now Verizon Communications Inc.). Under BC Tel, the business
operated as an electronics research laboratory and manufacturing facility.
Among the products manufactured were central office telephone test equipment,
telephone demarcation blocks, and a satellite based kiosk system used to provide
information at airports and other public facilities. Responsibility for the
manufacture of the Enterphone system was transferred into the business in 1984
from BC Tel. BC Tel contracted to sell the business in 1997 to Blue Mountain
Technologies Inc., a company that purchases and installs our products. Blue
Mountain Technologies Inc. simultaneously assigned its contractual rights to
acquire all of the business assets, except for certain leasehold interests, to
our subsidiary, Viscount Communication. BC Tel consented to the assignment and
accordingly the business was acquired by our subsidiary, Viscount Communication.
Stephen Pineau, our President and CEO, is an officer and director of both
companies. The shareholders of Blue Mountain Technologies Inc. hold 18.5% of
our currently issued common stock. Purchases of our products by Blue Mountain
Technologies Inc. account for approximately 7% of our total sales.

We were incorporated on May 24, 2001 under the laws of the State of Nevada under
the name OMW 4 Corp. Our subsidiary, Viscount Communication was incorporated in
1997 under the laws of British Columbia, Canada, for the purposes of carrying on
our present access control business. We acquired all of the issued and
outstanding shares in the capital of Viscount Communication on July 27, 2001, in
exchange for 10,000,000 shares of our common stock, thereby making it our wholly
owned subsidiary. As a result of the acquisition, the former shareholders of
Viscount Communications obtained a controlling interest in OMW 4 Corp. In
connection with the acquisition, we changed our name to Viscount Systems Inc.
effective August 27, 2001.

Enterphone is a specialized telephone switch used to provide intercom and access
control functions in high-rise buildings. It was originally developed by BC Tel
in 1965. Mirroring the increased security awareness in buildings over the past
few years, we have been providing a more comprehensive package of complementary
products. Products packaged, using third party technologies for this purpose,
include card access systems, radio frequency remote controls, intercom display
panels and closed circuit cameras.

Since 1998, we have been developing a new integrated platform for building
access control and management called MESH, which is currently the focus of our
corporate development.

INDUSTRY OVERVIEW

We compete in the building intercom and access control systems industry. Our
intercom and access control systems are designed to automate the control of
access to buildings or other restricted access areas. Intercom systems and
access control systems are complementary, however they can also be used
independently depending on user requirements. For example, most modern
residential apartment or condominium buildings have an intercom system for
visitors wishing to communicate with residents. Residents, on the other hand,
are issued access cards that can be used in conjunction with card readers
installed beside doors or elevators in order to gain access.

Access control systems provide two functions for a building. Building tenants
use access cards and readers that control access through doors, gates or
elevators, while visitors use telephone intercoms to be granted admission by a
building occupant. The systems also provide sophisticated alarm functions such
as identifying doors left open or forced entry. The sophistication of systems

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ranges from controlling a single door where records are kept manually, to large
enterprise systems covering hundreds of buildings from a dedicated security
facility.

The building control industry has traditionally been highly segmented based on
function. This has meant that makers of heating/ventilation and air-
conditioning systems and security card access systems essentially manufacture
input/output systems, while intercom makers manufacture voice systems, and
security camera makers manufacture closed circuit video systems. Stated
otherwise, audio, video, environment and access control systems are
traditionally all separate building control systems that are independently
controlled. There has been strong convergence of technologies in the computer
and telephone related industries based on digital standards, however the
building control industry has not as yet undergone a similar convergence of
technologies. Traditionally, where systems need to be compatible, the industry
has relied on integration instead of convergence. Integration is the use of a
host computer to tie separate and distinct systems, typically from different
manufacturers, together on a common software platform. Convergence, in the case
of building control systems, is the provision of a new service that is designed
to operate multiple systems using homogenous control parameters. Convergence is
generally considered preferable to integration, as fewer distinct systems means
lower operational and maintenance costs.

Along with certain other industry participants, we have recently turned to
current high-technology solutions in order to reduce costs of ownership of
security systems, while improving functionality. New system platforms are being
designed that will permit convergence of the control of various building
functions, such as access control, intercom, closed circuit television, and
heating/ventilation and air-conditioning. These systems can be operated on a
single commercially available host server and can operate using standard
communications techniques. As a result of using a single full service system to
replace the three or more separate dedicated systems, each requiring its own
host server, the overall cost of ownership of a security and control system will
be reduced.

Access Control Systems Technology

The access control industry has traditionally used a technology known as
Wiegand. Approximately 90% of the world's installed access systems are based on
Wiegand technology. Today, these systems are commonly found in residential,
commercial and industrial buildings in the form of access control cards and card
readers. Wiegand was initially developed in 1970 by Senso Engineering as an
access card technology. The card technology uses a special patented process
whereby wires are imbedded in a plastic access card to encode its data. When
passed through a magnetic field generated by a card reader, the card generates a
signal which is received and interpreted by the card reader. If the signal is
recognized, the reader will transmit the information to a host controller to
activate a switch, which for example purposes, may release a lock or open an
elevator to permit building access to the cardholder. A host controller is
essentially computer hardware that is programmed to receive information from the
card reader in order to permit access to a building. Wiegand technology has
established itself as the industry standard as it is viewed as being reliable
and difficult to counterfeit the access cards.

Other products that use the Wiegand principals for access control are magnetic
strip cards and radio frequency cards. These products function similarly by
providing a card reader with a signal that the reader interprets and transmits
to a host controller in order to grant or deny access.

As described above, Wiegand access control technology requires card readers that
are connected to a host controller. Each host controller can operate between 1
to 8 doors. Accordingly, a building with a large number of controlled access
points could require a large number of host controllers, resulting in greater
hardware costs. Host controllers can in turn be connected to a central server
that monitors the host controllers and collects information on access point
usage.

The underlying technology that operates these traditional access control systems
is approximately 30 years old. The readers are considered "dumb" readers as
they simply receive information from the access card and transmit it to a host
controller. The host controller processes the information in order to determine
whether to grant or deny access. If access is granted, the host controller

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then transmits a signal to activate a switch to open the access point where the
reader is located. This is a simple input/output type relay system which
requires a separate host controller for approximately every eight access points.

As a result of the limitations and hardware requirements of the traditional
access control systems, some security industry manufacturers are developing and
marketing "intelligent" access control and communications systems. Intelligent
systems allow several previously independent building control systems, such as
intercom, access control, video, and climate control, to be controlled by a
single server. These systems are based on software designed to control hundreds
of readers from a single computer server, combined with "smart chips" installed
in readers at each control point. Smart chips are programmable computer chips
that permit access card readers to grant or deny access without the need to
relay a signal to and from a central host controller. Smart chips can be
programmed to perform tasks for a diverse range of building control systems,
such as fire alarm systems, heating/ventilation and air conditioning, and
building access and elevator controls. As the smart chip is programmed to make
its own decisions on a given application, this reduces the load on the central
host computer. The host computer accordingly does performs primarily a
monitoring and information collection function.

We are participating in this advance in the access control industry through the
development of our proprietary MESH intelligent access control and communication
technology system. We believe that intelligent systems, including smart chip
readers and cards will supersede systems based on Wiegand technology.

PRODUCTS

We are a manufacturer and reseller of intercom and access control systems based
on telephone and traditional access card and reader technologies. Our intercom
and access control systems are installed throughout North America for various
applications including: condominium/apartment building access and intercom;
residential intercom; gated home/community access and intercom;
seniors/government housing access, tracking and intercom; elevator access and
tracking; and garage or perimeter gate control. For the year ended December
2001, approximately 50% of total sales of our products were generated in the
United States, and 50% in Canada, as compared to 47% of total sales were
generated in the United States, and 53% in Canada, for the year ended December
2000. Information on our existing products can be viewed on our website at
www.viscount.com.

We are also developing our MESH product, which is an intelligent access control
and communication system that will permit the integration of various building
functions into one system. We anticipate using existing and new distribution
channels in order to market our MESH technology. The MESH technology can be
sold as an upgrade to existing access control systems, or as a new installation.
We will also target other industry participants as potential purchasers of our
technology who may resell the technology under their own brand names.

Our Access Control Products

Our current principal product is the Enterphone 2000 intercom and access control
system. Enterphone is our patented building entry control system that uses a
building's internal phone wiring to allow access control for tenants and
intercom and access control between visitors and tenants. The use of a
building's internal phone wiring by our Enterphone system provides an option to
using telephone company wiring, thereby bypassing monthly telephone charges. It
also does not require tenants to pay for an individual phone line to operate
their intercom and door access system and is not affected by interruptions in
telephone company service. This makes our Enterphone system distinct from other
"dial-up" telephone entry systems that use telephone company lines. Sales of
our products based on the Enterphone system account for approximately 80% of our
total sales.

Our Enterphone 2000 system is sold as a central control panel which is installed
in a building's telephone control room. The control panel connects an intercom
panel located at an entrance to the building with the telephone of building

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tenants.  A visitor wishing to gain access to the building dials a 1 to 4 digit
number at the entrance panel. The call is directed from the entrance panel,
through the common control equipment and up to the tenant's telephone. The
tenant hears a unique ring and can unlock the entrance door by pressing a number
on the telephone's numeric key-pad. The tenant does not need to rent a
telephone line from the telephone company.  Each control panel can process
connections to as many as 840 suites. The following diagram illustrates the
system:

------------------------    ------------------------    ------------------------
Enterphone 2000                Enterphone 2000             Tenant
entrance panel           - >   control panel and     - >   Telephone
                               telephone jacks
------------------------    ------------------------    ------------------------

We also manufacture electronic entry access panels that can operate using either
our Enterphone 2000 system, or dial-up telephone company lines. Our panels are
manufactured in various sizes and with various features in order to accommodate
varying purposes and building types. For example, we manufacture panels that
provide intercom and access control from 1 suite to up to 1000 suites; or panels
that provide on-screen name search capabilities; or panels that are streamlined
in shape or small in size. All panels that we manufacture incorporate the
Enterphone technology, however most panels can also be installed to use
telephone company lines.

Our Enterphone panels can also be combined with other technologies such as
access tracking and control, closed circuit monitors, infrared and radio
frequency remotes, and Wiegand cards and card readers. We purchase these
technologies from other manufacturers and resell them under our brand names.
Most of the products that we resell can be integrated into our Enterphone access
control system.

Our MESH Access Control System

Overview

MESH is a new software based building management system designed to replace
traditional systems that are more hardware intensive. We have been developing
this new technology since 1998 and are currently completing the development of a
fully functional prototype.

The acronym MESH stands for Multimedia Embedded Security Hub is a software
platform that communicates with a network of "intelligent" input/output devices,
such as card readers or building environment sensors. As such the
"intelligence" of the system can be said to be distributed among the
input/output devices. This is contrasted with the traditional access control
industry, which uses dumb readers that require information to be processed at a
central host computer. An intelligent reader or input/output device uses a
pre-programmed "smart chip" which allows it to process information on its own,
and does not require the host computer to make action decisions, such as to
grant or deny access to a door or to activate air-conditioning. The use of
intelligent devices accordingly reduces the load on the host computer which
allows the host computer to allocate its resources to a greater number and
diversity of tasks. The networked distribution of intelligent devices also means
reduced cost resulting from reduced hardware requirements, easier training of
control system operators, and the use of commercially available host computer
hardware and communication techniques. Initially, we will apply the MESH
technology for access control system purposes.

The conceptual basis for MESH is simple. Virtually every low voltage building
technology, except building access, has evolved using intelligent addressable
network devices. This includes fire alarms and heating/ventilation and
air-conditioning. An addressable network is one in which devices can constantly
communicate with a host server controller or can be polled for information. For
example, if a smoke detector on a non-addressable fire alarm system fails, a
fire in that location may go undetected since there is no way to identify the
failure without actually testing the device. In contrast, the smart chip in an
addressable smoke detector may be able to notify the fire panel of a problem
immediately and call for service. Access control systems, however, continue to
be based on a 30-year-old standard called Wiegand. The limitations of this

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standard continue to plague the industry due to the slow data transmission speed
(9600 baud) between the reader and the host controller, the high cost and
quantity of specialized and dedicated hardware, and the inability of the host
computer to process voice or video signals. For example, buildings requiring
elevator access control have traditionally required a significant amount of
expensive dedicated hardware. The MESH network with intelligent readers can
accomplish these functions without dedicated hardware, resulting in cost
reductions, both in terms of the actual hardware required and the labour, cable
and conduit costs associated with installation.

The MESH system bypasses the need for specialized and dedicated hardware.
Instead, MESH provides a software-based platform that operates on an industrial
computer server connected to intelligent readers transmitting data at high speed
rates of up to 156,000 baud, while simultaneously running voice and video
applications. The benefits and functionality derived from this approach can be
significant.

MESH Structure

The MESH network consists of a main control computer server communicating with a
series of intelligent readers, panels, and input/output devices. The key to the
technology is the smart chip we use, known as the MPNode computer chip, a
programmable chip manufactured by Atmel. We purchase the MPNode chips and
program them to perform certain functions upon detecting certain data. For
access control applications, the chip is installed into a card reader. When
data from an access card is received by the card reader, the chip processes the
data and makes a decision to grant or deny access. Information on the
transaction is passed along to the host computer for data storage and analysis
purposes. Traditional Wiegand style card readers require an intermediate
controller for every two or three reading devices. An intermediate controller
is connected between the host computer and the group of readers controlled by
it. In contrast, the MESH systems allows intelligent readers to be installed in
series, or daisy-chain fashion, without the need for intermediate controllers.
This reduces hardware costs as only one host computer is required.

MPNode chips are programmable and accordingly can be applied to various
customized tasks requiring an input and output device. The ability of a MESH
server to connect directly to a computer network or network of readers, without
intermediate controllers, provides additional benefits in terms of cost,
connectivity and programming.

MESH panels, located at entrance doors for visitor access, can operate
independently or as slaves off the MESH server. The basic MESH panel that we
are developing is a full colour screen industrial computer. Panels may be
located at entrance doors for visitor access or can be on-site managed by
security guards as they manage the MESH network. The slave/master architecture
of MESH panels reduces cost, simplifies programming, and improves data base
management.

In designing MESH, much consideration has been made of the many dissimilar
applications requiring a MESH network. In cases where building control is
accomplished with on-site security and concierge staff, limited MESH hardware or
possibly only software may be needed to perform the required functions. For
example, MESH software may be sold as a simple visitor tracking system for
commercial or gated residential sites. In general, MESH has been designed to
allow simple installations to be performed by small independent alarm
contractors. However, provision has also been made for direct involvement by
our staff in large campus wide and enterprise wide installations.

MESH has many additional benefits, both in terms of building security and
particularly relative to the legacy Wiegand protocol. It is our belief that
addressable networks pose a serious threat to the continued use of the Wiegand
format.

MESH is a modular product, meaning that the software can accommodate add-on
features or upgraded features. We will develop various modules for our MESH
technology, which will be released in a series of phases. Some of these
product enhancement modules that we may explore and develop have been outlined
below:

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*   MESH Photo-badging software is being designed to allow digital photo-
    imaging of individuals accessing a building, which can be stored in a
    database;

*   MESH Time and Attendance software will allow human resources personnel to
    use the card reader database to track employee attendance and to
    automatically adjust card user characteristics based on vacation schedules,
    holiday dates and termination;

*   MESH has the inherent ability to control other electrical circuits. For
    example, this allows MESH to turn lights on or off based on the sections of
    a building used by a card holder or to interface with air conditioning
    units;

*   The MESH server provides new opportunities to host video on the unified
    platform with voice and data. This would represent an entirely new concept
    in the security industry;

*   The nature of the MESH server makes MESH telephony products inherently
    Internet enabled. Future MESH appliances may include the MESH television
    line, which allows residents to view visitors at the door and doubles as an
    Internet shopping device. MESH panels can connect to web enabled set top
    boxes being promoted as part of the web TV market. MESH television panels
    would also compete in the large offshore video intercom business but at a
    fraction of the cost by saving on conduit and cable;

*   The distributed intelligence of MESH makes the product suited to the growing
    emergency call/nurse call industry;

*   MESH networks are built on an open architecture platform which is fully
    functional to integrate with any existing automation network;

*   The initial MESH card reader release will be based on proximity technology.
    We intend to expand the product line to include readers based on our own
    infrared system, biometrics, radio frequency and any other reader type which
    appears to have potential. This may also include the world's first readers
    with built-in audio and video ability; and

*   A new and emerging market segment tracks not just people, but equipment. A
    typical application is the embedding of anti-theft chips in computers, which
    integrate with card reader systems.

OTHER CURRENT RESEARCH AND DEVELOPMENT

In addition to our MESH technology, we have developed a new product called
EmerPhone which is currently commercially available. The EmerPhone is scheduled
to be commercially available in 2002. The EmerPhone system consists of a core
electronic assembly designed for several separate tasks. These task
applications require a variety of mechanical and electronic assemblies.
Applications of the EmerPhone are as follows:

*   Elevator phones - these small assemblies are required by law to allow people
    stuck or injured in elevators to call for assistance. Options include
    surface mount, voice activation, voice messaging, and call indicators for
    the disabled.

*   Panic phones - these units are used primarily for parking lots and
    underground parking. They allow people in distress to contact security
    personnel. Options include strobes and sirens to scare away attackers.

*   Parking phones - these units are designed to allow people at a parking gate
    to contact the parking management office if they forget an access card or
    the gate is broken. Management then has the ability to open the gate
    remotely.

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*   Information assistance phones - are used for ATM machines, airports, prisons
    and other applications where a vandal resistant phone is required to allow
    people to get information on using equipment, hotel reservations.

*   Industrial assistance phones - are more ruggedly built units for factories,
    oil platforms and other industrial applications where specifications may
    even require explosion proofing.

*   Campus phones - are a rapidly growing market segment reflecting the
    heightened sense of security at university and commercial campuses. Similar
    to panic phones, campus phones may be built into housing up to 12 feet tall.
    Strobes, sirens and security cameras may be built into the campus phone. A
    key element of a campus phone is tracking software. Similar to caller ID
    software, tracking software allows campus personnel to pinpoint the exact
    location calling by address or on a map. The systems also require automatic
    system integrity diagnostics.

PRODUCTION

We currently manufacture the Enterphone 2000 control and entrance panel products
in-house. Our card readers, radio-frequency and infra-red access, and tracking
systems are purchased from other manufacturers and resold under our brand-names.
We maintain full facilities to assemble through-hole circuit boards and limited
facilities for assembling surface mount circuits. We have a policy of
supporting old products for up to 20 years and having an assembly staff that
allows us the flexibility to produce small runs of high margin legacy products.
We plan to continue this process for our older products such as previous
versions of the Enterphone. Any new hardware based product designed on a
surface mount platform will be produced on a sub-contract basis with final
mechanical assembly at Viscount.

We have contracted with software developers to develop our MESH software
platform. The MESH software platform is loaded on standard industrial computer
chassis. We have elected not to develop hardware internally for MESH since the
required hardware controllers are commercially available at quality and price
levels that make internal development uneconomical. In addition, by using
off-the-shelf components, we improve our time to market, eliminate hardware
debugging and increase our ability to be technologically flexible in the future.
We will primarily execute final mechanical assembly of the MESH systems.

MESH Development Schedule

The original MESH program was implemented to develop interactive display panels.
These panels were originally scheduled to be available in March 2000. However,
we subsequently expanded the features of the system and as a result the initial
commercial release is currently scheduled to occur in mid 2002. There is no
guarantee that we will be able to meet this commercial release schedule.
Product Development

We have two employees currently dedicated full-time to research, development and
product engineering. In addition, three other employees contribute to research
and development on a part-time basis. During fiscal 2000 and 2001, we incurred
approximately $268,691 and $223,140 respectively, on research and development,
net of investment tax credits, primarily related to the development of the MESH
system.

MARKET AND MARKETING

The Market

The intercom and access control market is serviced by a number of large and
small competitors. Our traditional products compete in a mature marketplace,
that largely uses the 30 year old Wiegand technology. We believe that there
currently exists an opportunity in the building and access control market for

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innovative products that use current technologies to reduce user costs. We have
positioned our MESH technology to take advantage of this opportunity.

Accordingly, the focus of our marketing initiatives for 2002 will involve our
MESH technology. The first release of MESH will compete in the intercom and
access control security system market.

The access control market can generally be described as the market for any
equipment used to control passage through a door, gate or other portal. A
portion of this market is comprised of mechanical and electronic door locks that
typically control access through single doors. Many of the single door systems
have been engineered for low security levels for customers who do not desire a
full access control host. The access control market that we compete in involves
computerized access control systems that typically control access through
multiple access points, such as our Enterphone 2000 system. Our new MESH
product was designed to present a new technology to this computerized market
niche. In particular, in large high-rises with a full MESH system, individual
tenants may use the MESH server to control access to one or two doors.

Our traditional market for our Enterphone 2000 product was apartment and
condominium buildings. While the market for telephone entry type systems
amounts to about US$100 million, in the past 10 years there has been a strong
trend towards increased building security resulting in much more sophisticated
integrated installations. For example, in 1990 a typical condominium building
would be equipped with an intercom to admit visitors. Today, a typical new
building installation includes telephone entry, card access, closed circuit
cameras, individual burglar alarms and panic stations. This puts pressure on
manufacturers to provide a comprehensive package and represents an opportunity
for significant revenue growth per system. MESH will be our first in-house
product that addresses these multiple requirements . The modular nature of MESH
also provides us with an excellent opportunity to design additional products on
the MESH platform to provide enhanced options for a comprehensive building
security package.

In addition to apartment entrances, MESH was also designed to provide access
control for the rapidly growing gated community market. Monitor style directory
panels are also used in thousands of commercial high-rises. The MESH panel
provides features previously unavailable for this market. The overall effect of
these system advances will be to enhance our core business, while finding
applications where the new features expand the traditional market for such
systems.

We will also target upgrades and retrofits to existing apartments and other
complexes that use traditional telephone wire intercom access control systems.
The low hardware costs and increased functionality of the MESH system will be
marketed to building management companies, along with its turnkey installation
as a replacement to existing access control systems for most modern buildings.

While complete MESH networks will typically be installed, the modular nature of
MESH allows additional segmentation based on product application and end-user
need. The nature and scope of a MESH installation depends on the level of
security required, the product alternatives, the number of buildings, and the
level of system management required. The nature and scope of an installation
can be described in terms of a user spectrum ranging from price sensitive users
to users requiring enhanced services. At one end of this spectrum is price.
For these applications MESH will be competing with traditional Wiegand systems.
We believe the cost reduction aspects of MESH will provide us with a competitive
advantage over traditional Wiegand systems. For example, a typical condominium
developer does not manage a building after construction. Therefore, the
developer is looking for a very affordable, reliable access control system.
Unless a more sophisticated product will help sell suites the developer tends to
keep the system simple. At the middle of the spectrum are customers who will
adopt MESH mainly due to system benefits. For a commercial high-rise this may be
the flexibility derived from a new user profile approach MESH uses for
programming. On the enhanced service end of the spectrum we find customers who
need to develop a much closer relationship due to the level of sophistication of
their needs. At this level, we anticipate additional revenue opportunities for
custom programming, data mining and hosting, and direct installations for
national accounts.

<PAGE>
Page 11

While the core function is controlling access/egress, through the planned
development of various MESH technology modules we will actively target all of
these segments. For example, a MESH add-on module can be developed to provide
an asset tracking system to prevent computer theft. The inherent alarm
functions of MESH allow it to be used as an integrated theft/burglar alarm
system for large facilities. The MESH telephony video capture function will
allow government agencies to track alcohol and drug problem tenants of
controlled housing complexes or other regulatory monitoring functions. Finally,
MESH, along with our new EmerPhone, can function to combat vandalism and to
secure parking lots.

We rank controlling access/egress and securing parking facilities as the primary
concerns of our traditional core multi-residential business.

Distribution Plan

We currently have approximately 500 dealers of our existing products throughout
North America. When our existing business was acquired from BC Tel, we relied
primarily on exclusive and semi-exclusive dealers in certain major metropolitan
areas. Our distribution network is not static and we are constantly seeking
additional sales channels. Our existing distribution dealers may be used to
market and install the MESH system, however not all existing dealers will meet
the profile or qualifications required to understand and install a MESH network.
Accordingly, we will be evaluating various reseller and dealer channels for
distribution of our MESH systems.

As MESH is a new technology, we believe it is important that we penetrate the
market quickly. Establishing exclusive dealers would give competitors added
incentive to find a solution to the MESH network technology. For this reason,
we see an advantage in adopting a "shot gun" style marketing plan for MESH. We
will establish large numbers of dealers, primarily based on qualifying for
credit and technical ability. We then intend to sell through qualified
distributors as well to expand our market coverage.

As previously noted MESH can serve several different markets and the type of
dealer serving each may vary. Simple installations may be performed by small
independent dealers, but as the overall scope of the project increases, the
technical ability of the dealer becomes increasingly important. At the extreme,
our employees may be directly involved with the customer in designing,
installing and servicing the product. In other cases, our personnel may be
involved on a co-op basis with large national security, building automation and
heating/ventilation and air-conditioning contractors.

These distribution deals, along with our existing dealer base, gives us
immediate access to the largest networks of dealers in the US, Canada and
Mexico.

While we will initially be targeting our existing markets for the sale of our
MESH technology, the market for our MESH product is worldwide. MESH is designed
to accommodate foreign languages with minimal modifications to the software.
This is in contrast to other products of its type which require a heavy
software investment to provide alternative language software. With MESH, the
core software can be applied in all languages with only the on screen text
displays needing to be translated. Translation can be accomplished using
commercially available translation software.

MESH Marketing Strategy

We will use our established distribution channels as well as new distribution
channels to access our target markets for the MESH technology. As a unique
technology, however, end-users as well as dealers must be educated about MESH
benefits. It is our experience that a stronger initial emphasis on end-user
decision-makers and large national system integrators will be the most effective
in developing the MESH market.

Advertising

We intend to pursue an advertising strategy, which involves a mix of dealer and
end-user security and building automation magazines. The unique nature of MESH
places us in a position of having strong editorial leverage. We have already

<PAGE>
Page 12

secured agreements with most major publications to introduce the concept. This
approach will include a full feature story by the editors highlighting the new
technology, a story outlining application specific benefits and print
advertising relating to the product.

There are approximately 30 magazines worldwide which are credible venues to
advertise MESH technology. We will initially advertise our MESH launch in
approximately twelve industry magazines in North America.

Our current products are advertised on an ongoing basis in various print
publications, which we will continue to do with our MESH products. We have been
testing new publications on a regular basis to evaluate response, sales and
readership. All leads are followed up and magazines are rated based on a dollar
sales per advertising dollar spent ratio. While the sales cycle is sometimes
fairly long, this approach has given us a very accurate measure of the
effectiveness of various publications and individual ads.

Trade Shows

We have experienced that the marginal dollar benefit of trade show participation
is much less than other promotional media (print ad, direct mail etc.).
Therefore, we intend to be very selective in introducing MESH this way. We
intend to focus on end-user targeted shows rather than dealer shows. It has
also been our experience that trade shows are sometimes too useful in educating
one's competitors about new advances in technology. The primary end-user shows
we are considering attending, target corporate and institutional security
decision-makers, building management and developers, and finally, building
automation facility managers.

Direct Marketing

One of the most effective ways to market security systems is to identify major
institutional and corporate users and market directly to key individuals. We
intend to hire direct marketing staff to market our MESH technology and
institute an aggressive program to meet key decision making individuals.
Because of the proprietary nature of MESH, we are flexible to meet customer
specifications. We will use this approach to push MESH technology into the
market.

Pricing Strategy

Our system provides features never before available in a building control
security system. The MESH technology is built on an architecture which can
reduce user costs significantly. The modular nature of the technology amplifies
this effect the larger the system becomes.

With a unique product and a position of product leadership, we will have a
strategy of building market share. This implies a product sold at reasonable
50-60% margins. With the telephony component, we are targeting a price which
provides MESH panels at a price that is competitive with similar products, but
with new enhanced features.

COMPETITION

Competitive Summary

The security and building control industry is undergoing a rapid period of
consolidation. Large multi-national companies are integrating vertically by
acquiring equipment providers to build house brands. Recent examples are the
purchase of Cardkey by Johnson Controls, Guardall by Chubb and ADI/Northern
Computers by Honeywell. The access control industry is very segmented with no
company having a dominant market position. Canada has approximately six control
manufacturers, while the US has at least fifty. There is a certain amount of
vertical integration in the business and several large multinational companies
own their own house brands. Many branches of these multinational companies
often have their own brand preferences and buy outside their internal
distribution channels.

<PAGE>
Page 13

Almost all manufacturers build control hosts based on Wiegand technology. Due
to these limitations, most research and development is focused on cost reducing
hardware and making the control hosts more network capable. In all cases, the
manufacturer using traditional Wiegand technology are limited from 1 to 8 doors
per host.

Insofar as the use of intelligent readers are concerned, the existing industry
is relatively new and accordingly is small and only amounts to about $100
million US per year. There has been some consolidation. The largest US firm,
Sentex Systems, was recently acquired by The Chamberlain Group, Inc., a large
manufacturer of industrial products. We see many opportunities for MESH panels
outside the traditional visitor entry control function. Basic panels will be
priced to compete favorably with similar low-tech systems to build market share.

Competitive Threats

While we have a strong dealer and distribution plan in place, MESH will position
us in a market dominated by much larger players. The higher security MESH
applications are also somewhat outside of our traditional scope of business. We
must rapidly develop a market for MESH and educate users of the MESH benefits in
order to achieve market share that will allow us to be competitive in this
market. There is no guarantee that we will be able to successfully compete
against our larger competitors.

While MESH is a new product in an established growing market, technological
change can be met with resistance. Some buyers are nervous about new products,
and new protocols even more so. Most buyers are familiar with the benefits of
addressable fire alarms and we intend to market MESH from this point of view;
that is to stress the inevitability of all access control systems evolving this
way.

From an initial commercial point of view, one challenge for us is the relatively
long sales cycles of security projects. Systems such as MESH may take up to 2
years from specification to installation, so sales forecasts can be adversely
affected by the pace of construction and the general decision making process.

Another key concern is the ability of competitors to imitate the product and the
ability of large imitators to more easily commercialize their product. We have
estimated that we will have a three-year market lead. Fortunately, the wide
range of MESH software applications should provide us with an ongoing lead as
long as we are aggressive with research and development.

OUR SOURCES OF REVENUES

The majority of the Company's revenues are derived from the Enterphone product
line. Historically, the Enterphone sales represented approximately 72% to 80%
of total revenues. The balance of the Company's revenues are derived from other
products such as access tracking and control, closed circuit monitors, infrared
and radio frequency remotes. Our MESH technology, if successfully brought to
market, will be a new source of revenue for us. If our initial release of our
MESH technology is successful we will be developing additional applications for
the technology in order to generate other sources of revenue.

EMPLOYEES

Viscount employs twenty-three full and part-time staff at its factory in
Burnaby, British Columbia.

Item 2. DESCRIPTION OF PROPERTIES

Property

Our executive office and central factory is located in Burnaby, British
Columbia, where we currently lease 12,040 square feet. We lease this space
under an industry standard operating lease with a term expiring May 31, 2004,
renewable at the option of Viscount. Current monthly lease obligations are
$6,521. We believe that our current facilities are adequate and are suitable

<PAGE>
Page 14

for our current use, and that suitable additional facilities will be available,
when needed, upon commercially reasonable terms. Our facilities are adequately
insured against perils in a manner consistent with industry practice.

Intellectual Property

We will rely on a combination of patent laws (if applicable), trade secret laws,
non-disclosure and other contractual agreements, and technical measures to
protect the confidential information, know-how, and proprietary rights relating
to our Enterphone 2000, MESH and other Viscount products. We have contractual
rights with respect to registered North American trademarks and tradenames
including the following: Viscount, Enterphone, Enterchek, Infraclick,
Emerphone. We are in the process of filing an application for a North American
patent on our MESH technology, and registering North American trademarks and
tradenames for MESH.

We have registered active Internet domain names for www.viscount.com and
www.enterphone.com.

Our standard employment agreements and license agreements contain provisions
that protect the confidentiality of our proprietary property. All our employees
and sales agents are required to sign these agreements prior to their employment
or engagement.

To date we have not received notification that our services or products infringe
the proprietary rights of third parties. Third parties could however make such
claims of infringement in the future. We cannot be certain that others will not
develop substantially equivalent or superseding proprietary technology, or that
equivalent services will not be marketed in competition with our services,
thereby substantially reducing the value of our proprietary rights.
Furthermore, there can be no assurance that any confidentiality agreements
between us and our employees or any license agreements will provide meaningful
protection for our proprietary information in the event of any unauthorized use
or disclosure of such proprietary information.

Government Regulation

All Viscount equipment is FCC and IC approved. Our products are also UL and ADA
approved where required by law depending specifically on particular products and
place of installation.

Some Viscount products are still under government regulation. The Enterphone
2000 is an interposition technology which can only be installed in U.S. states
where the local public service commission has designated the original point of
entry of a building as the demarcation point between the telephone company and
building owner's responsibility.  Conversely, it can also be installed where
the telephone company has given consent to allow Enterphone to share the
telephone backbone.

The history of government deregulation for Viscount mainly relates to the
demarcation point in a building. Until government deregulation came to the
access control industry, Enterphone type systems could only be installed by
telephone companies.

Historically, Enterphone was approved by MA Bell. After the break-up each
regional telephone company began to make its own decisions. As a result of this,
Chicago, New York, and Boston became strong markets for the Enterphone. Another
result of government deregulation was that many telephone companies withdrew
from the access control systems industry, which resulted in our using direct
dealers in those regions.


Item 3. LEGAL PROCEEDINGS

To the best of our knowledge, there are no legal actions pending, threatened, or
contemplated against us.

<PAGE>
Page 15

Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None.

PART II.

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTER

Our shares are currently eligible for trading on the Over-the-Counter Bulletin
Board, which is a quotation service administered by the National Association of
Securities Dealers (NASD). Our trading symbol on this service is "VSYS".

The OTC Bulletin Board has a limited and sporadic trading market and does not
constitute an established trading market. Our shares began trading on February
13, 2002. Since the Commencement of trading, our shares have traded at a low of
U.S. $0.75 and a high of U.S. $1.68. These prices do not reflect retail markup,
markdown or commissions.

There were 49 holders of record and, to the best of our knowledge, beneficially
of our common stock as of February 28, 2002, holding a total of 13,500,000
shares.

There are currently 10,037,000 shares of our common stock that are restricted
from resale under Rule 144 promulgated under the U.S. Securities Act of 1933.
The following table summarizes the hold periods applicable to our common stock
under U.S. federal securities laws:

      Number of
        Shares                             Description
      ---------                            -----------

     10,000,000     Shares that may be sold beginning on July 27, 2002 in
                    accordance with Rule 144.

         37,000     Shares that may be sold beginning on August 20, 2002 in
                    accordance with Rule 144.


There are no contractual restrictions on the resale of the outstanding common
stock.

In general, Rule 144 under the Securities Act provides that securities may be
sold if there is current public information available regarding the issuer and
the securities have been held at least one year. Rule 144 also includes
restrictions on the amount of securities sold, the manner of sale and requires
notice to be filed with the SEC. Under Rule 144 a minimum of one year must
elapse between the later of the date of the acquisition of the securities from
the issuer or from an affiliate of the issuer, and any resale under the Rule.
If a one-year period has elapsed since the date the securities were acquired,
the amount of restricted securities that may be sold for the account of any
person within any three-month period, including a person who is an affiliate of
the issuer, may not exceed the greater of 1% of the then outstanding shares of
our common stock or the average weekly trading volume in the over-the-counter
market during the four calendar weeks preceding the date on which notice of sale
is filed with the SEC. If a two-year period has elapsed since the date the
securities were acquired from the issuer or from an affiliate of the issuer, a
seller who is not an affiliate of the issuer at any time during the three months
preceding a sale is entitled to sell the shares without regard to volume
limitations, manner of sale provisions or notice requirements. Affiliates of
the issuer are subject to an ongoing volume restriction pursuant to Rule 144 on
re-sales of shares held by them.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

The following discusses the Company's financial condition and results of
operations based upon the Company's consolidated financial statements which have
been prepared in accordance with generally accepted accounting principles in the

<PAGE>
Page 16

United States. It should be read in conjuction with the Company's financial
statements and the notes thereto and other financial information included in the
Company's Form 10-KSB for the year ended December 31, 2001.

Revenues for the twelve months ended December 31, 2001 were $3,238,518, a
decrease of 9.53% as compared to revenues of $3,579,781 for the twelve months
ended December 31, 2000. Sales volume decreased significantly in September and
October 2001, following the September 11, 2001 terrorist attacks on the United
States.

The cost of goods sold as a percentage of sales was 46.53% for the twelve months
ended December 31, 2001 as compared to 49.28% for the twelve months ended
December 31, 2000. We have focussed on controlling costs and using multiple
vendors to ensure input costs are managed. We have also focused on selling
higher margin products to increase profits. The reduction in costs of goods
sold in 2001 was due to the following factors:

      *   In 2001, all freight and brokerage costs were charged to the customer.
          These costs were not charged to the customer in the beginning months
          of the period ended December 31, 2000.

      *   We reduced the amount of metal on the common/control line expansion
          unit resulting in reduced input costs; and

      *   A new supplier was used for keypads, speakers, and PC boards resulting
          in lower costs for these parts.

Gross profit for the twelve months ended December 31, 2001 was $1,731,506, a
decrease of 4.62%, as compared to the gross profit of $1,815,537 for the twelve
months ended December 31, 2000. The decrease corresponds with the reduced
revenues.

Selling, general and administrative expenses were $1,412,547 for the twelve
months ended December 31, 2001 as compared to $1,503,239 for the twelve months
ended December 31, 2000, a decrease of 6.03%. As a percentage of revenues,
selling, general and administrative costs were 43.62% in 2001, as compared to
41.99% in 2000.

Research and development costs were $223,140 for the twelve months ended
December 31, 2001. This is consistent with the research and development costs
of $268,691 for the twelve months ended December 31, 2000. These costs are
shown net of investment tax credits recognized.

Liquidity and Capital Resources

Bank indebtedness net of cash and cash equivalents as at December 31, 2001
totaled $214,809, as compared with the bank indebtedness net of cash and cash
equivalents of $286,088 as at December 31, 2000. We have a bank credit facility
available for an operating loan of up to a maximum of $500,000 at prime lending
rate plus 1%. The facility is secured by a general security agreement.

On December 31, 2001 we had a working capital of $162,126 and a current ratio of
1.13 to 1.0. The working capital position is consistent with December 31, 2000
of $235,015 and a current ratio of 1.16 to 1.0. Included in the working capital
are amounts due to stockholders of $448,402 which are non-interest bearing,
unsecured and without repayment terms.

We have funded business operations using cash provided by operating activities
and from funds advanced under the bank credit facility. For the twelve months
ended December 31, 2001 we generated $268,247 from operating activities.

<PAGE>
Page 17

For the twelve months ended December 31, 2001, there were no capital
expenditures. For the twelve months ended December 31, 2000, investing
activities consisted primarily of purchases of property and equipment,
principally computer and manufacturing equipment and leasehold improvements.
These purchases totaled $39,910.

To date, we have not invested in derivative securities, or in any other
financial instruments that involve a high level of complexity or risk. We
expect that in the future, any excess cash will continue to be invested in high
credit quality, interest-bearing securities.

We believe cash from operating activities will be sufficient to meet our working
capital requirements for at least the next 12 months. We require additional
funds to support the development and marketing of our new MESH product.
Subsequent to the year end, the company raised U.S. $1,040,000 in additional
equity financing.

There are no legal or practical restrictions on the ability to transfer funds
between parent and subsidiary companies.

We do not have any material commitments for expenditures as of December 31,
2001.

There are no known trends or uncertainties that will have a material impact on
revenues.

Item 7. FINANCIAL STATEMENTS

The financial statements are attached to this report following the signature
page.

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

Not applicable.

PART III.

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Directors and Executive Officers

Our Board of Directors and executive officers and their respective ages as of
February 28, 2002 are set forth in the table below. Each of the directors of
Viscount will serve until the next annual meeting of shareholders or until his
successor is elected and qualified. In the event that there are three or more
directors, the directors will be divided into three different classes. Each
director will serve for a term ending on the date of the third annual general
meeting following the annual general meeting at which the director was elected,
provided that each initial director in the first class holds office until the
first annual meeting of the shareholders; each initial director in the second
class holds office until the second annual meeting of the shareholders; and each
initial director in the third class holds office until the third annual meeting
of the shareholders. At least one-third of the directors must be elected
annually.

Also provided is a brief description of the business experience of each director
and executive officer and the key personnel during the past five years and an
indication of directorships (if any) held by each director in other companies
subject to the reporting requirements under the Federal securities laws.

<PAGE>
Page 18

-------------------------------------------------
    Name and Position                    Age
-------------------------------------------------
Stephen Pineau                           39
President, Chief Executive
Officer, Secretary and Director
-------------------------------------------------
Greg D.C. Shen                           55
Chairman of the Board and
Director
-------------------------------------------------
Les Fong                                 31
Chief Financial Officer
-------------------------------------------------

Following is a discussion of the business background of each director and
executive officer.

Business Experience

Stephen Pineau is the President, Chief Executive Officer and a Director of
--------------
Viscount. He has served as a director and officer of Viscount since July 27,
2001, and as a director and officer of our subsidiary, Viscount Communication
since July of 1997. He was employed at Viscount Communication & Control Systems
Inc., a subsidiary of BC Tel, as Marketing Director from 1992-1995. He left
Viscount Communication & Control Systems Inc. to start Blue Mountain
Technologies Inc., where he held office as President from 1995 to 1997.  Blue
Mountain Technology Inc. replaced B.C. Tel as the main Vancouver installation
company of Viscount products. Since 1997 Mr. Pineau has held office as
President of the current Viscount Communication & Control Systems Inc.

Greg Shen is the Chairman of the Board and a Director of Viscount. He has served
---------
as a director and officer of Viscount since July 27, 2001, and as a director and
officer of our subsidiary, Viscount Communication and Control Systems Inc. since
July of 1997. Prior to Viscount Communication & Control Systems Inc., he acted
as Production Manager at Microtel, a subsidiary of BC Tel from 1975 to 1993. Mr.
Shen was Chief Executive Officer of Viscount Communication & Control Systems
Inc. from 1997 to 2001 and Chairman of Blue Mountain Technologies Inc. from 1997
to 2001. In 2001 he was appointed Chairman of Viscount. His primary expertise
and responsibilities related to Spacetel satellite products. Viscount
Communication & Control Systems Inc. was also a Microtel division at one time,
and as Production Manager, Mr. Shen became very familiar with Viscount products.
Mr. Shen has a Masters degree in Engineering from West Coast University at Los
Angeles.

Les Fong is the Chief Financial Officer of Viscount.  He has served in this
---------
capacity since July 27, 2001. Previously, he was Assistant Accountant for
Pacific Western Brewing Company from 1996 to 1997, Accounting Consultant for
Royal Canadian Homes Ltd. from 1996 to 1997, Contract Accountant for City West
Development Corporation in August of 1997, Contract Accountant for BMW Sydney
Ltd. in 1997, Accountant for Viscount Communication & Control Systems Inc. from
1998 to present, and Accountant for Blue Mountain Technologies Inc. from 1998 to
present. Mr. Fong acquired a Bachelors degree in Commerce from the University of
British Columbia.

Employment Contracts and Change in Control Agreements

Stephen Pineau - President

On January 1, 2001, our subsidiary, Viscount Communication, entered into an
employment agreement with Mr. Stephen Pineau, pursuant to which Mr. Pineau
serves as our President and Chief Executive Officer. The agreement provides for
an annual base salary of $72,000, a bonus of 10% of the net income of Viscount
Communication before interest and taxes, a lease and related expenses of a
company vehicle to be used.

The initial term for Mr. Pineau's agreement is one year with automatic renewal
at the employee's discretion unless a minimum 30 days notice is given by
Viscount Communication.

<PAGE>
Page 19

Greg D. C. Shen - Chairman and Director

On January 1, 2001, our subsidiary, Viscount Communication, entered into an
employment agreement with Mr. Greg Shen, pursuant to which Mr. Shen serves as
our Chairman of the Board. The agreement provides for an annual base salary of
$57,321, a lease and related expenses of a company vehicle to be used.

The initial term for Mr. Shen's agreement is one year with automatic renewal at
the employee's discretion unless a minimum 30 days notice is given by Viscount
Communication.

Item 10. EXECUTIVE COMPENSATION

The following table sets forth all compensation paid or earned for services
rendered to us in all capacities during the years ended December 31, 1999,
December 31, 2000, and December 31, 2001 by our President and Chief Executive
Officer (the "Named Officer"). No executive officer received total annual
salary, bonus and other compensation in excess of $100,000 in those periods. No
executive officer that would have otherwise been included in this table on the
basis of salary and bonus earned for the 2001 fiscal year has been excluded by
reason of his or her termination of employment or change in executive status
during the fiscal year.

<TABLE>
<CAPTION>
                                     Summary Compensation Table
                                     --------------------------
                                             Annual Compensation                  Long-Term Compensation
                                     -----------------------------------   -----------------------------------
                                                                                                  Securities
                                                                                Stock             Underlying
Name and Principal Position           Year      Salary         Other            Awards           Options/SAR's
---------------------------          ------   -----------    ---------     ---------------   -----------------
<S>                                   <C>     <C>             <C>                <C>                 <C>
Stephen Pineau                        1998    $ 57,862          -                Nil                 Nil
President, Secretary, and             1999    $ 62,059        $2,000[1]          Nil                 Nil
 Chief Executive Officer              2000    $ 61,822        $3,000[1]          Nil                 Nil
                                      2001    $ 72,852          Nil              Nil                 Nil
</TABLE>

[1]  These amounts were paid to the Named Officer for Directors Fees.

Option Grants in Last Fiscal Year

The Board of Directors has approved the issuance of stock options to our
employees, directors, officers, and consultants. Unless otherwise provided by
the Board, all vested options are exercisable for a term of ten years from the
date of grant. On December 21, 2001, there were options granted to acquire
1,255,000 shares of the authorized common stock.

Director Compensation

No compensation was paid to directors for services rendered as a director other
than director fees from our Viscount Communication subsidiary to Stephen Pineau
in the amount of $2,000 for fiscal 1999 and $3,000 for fiscal 2000, and $0 for
fiscal 2001.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANANGEMENT

The following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of December 31,2001 by (a) each person known by
us to be a beneficial owner of more than five percent (5%) of our issued and
outstanding common stock; (b) each of our Directors; and (c) all our directors
and officers as a group.

<PAGE>
Page 20
                                                                  Percentage of
                                                                     Shares
       Name and Address of                         Shares         Beneficially
         Beneficial Owner                   Beneficially Owned       Owned
         ----------------                   ------------------    --------------

Stephen Pineau                                    1,700,000(1)            10.93%
President, CEO, Secretary and Director
10271 Cathcart Road, Richmond
British Columbia, Canada

Greg D.C. Shen                                    3,150,000(1)            20.32%
Chairman and Director
2056 West 58th Ave., Vancouver,
British Columbia, Canada

Les Fong                                             25,000(1)             0.17%
Chief Financial Officer
3195 East 28th Avenue, Vancouver
British Columbia, Canada

Chi Hua Liu                                       1,583,333              10.49%
1888 Westbrook Crescent,
Vancouver, British Columbia, Canada

Steven Leach                                      1,250,000               8.28%
14905 - 93A Avenue, Surrey,
British Columbia, Canada

Chin Dong Pai                                     1,750,000              11.59%
2802-1050 Burrard Street, Vancouver,
British Columbia, Canada

Cho Kun Ko                                        1,416,667               9.38%
7479 - 17th Ave., Burnaby,
British Columbia, Canada

All directors and officers as a group             4,875,000(1)           30.52%
(3 persons)

(1) These amounts include beneficial ownership of securities not currently
    outstanding but which are reserved for immediate issuance on exercise of
    options. In particular, these amounts include shares issuable upon exercise
    of options as follows: 450,000 shares issuable to Stephen Pineau; 400,000
    shares issuable to Greg Shen; 25,000 shares issuable to Les Fong.

Item 12. CERTAIN TRANSACTIONS

None.

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the last quarter of the period covered
by this report.


<PAGE>
Page 21

                                        Signatures
                                        ----------

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on March 27, 2002.

                                           VISCOUNT SYSTEMS INC.
                                           By:   /s/ Stephen Pineau
                                           Stephen Pineau
                                           President and Chief Executive Officer

In accordance with the requirements of the Exchange Act, this report has been
signed by the following persons on behalf of the registrant and in the
capacities indicated on March 27, 2002.

By:   /s/ Stephen Pineau              President, Secretary and
    ------------------------
    Stephen Pineau                    Chief Executive Officer



By:   /s/ Greg Shen                   Chairman of the Board
    ------------------------
    Greg Shen



By:   /s/ Les Fong                    Chief Financial Officer
    ------------------------
    Les Fong

<PAGE>







                  Consolidated Financial Statements
                  (Expressed in Canadian dollars)

                  VISCOUNT SYSTEMS INC.
                  (Formerly OMW4 Corp.)

                  Years ended December 31, 2001 and 2000

<PAGE>



AUDITORS' REPORT
To the Stockholders and Board of Directors
Viscount Systems Inc.

We have audited the consolidated balance sheets of Viscount Systems Inc.
(formerly OMW4 Corp.), as at December 31, 2001 and 2000 and the consolidated
statements of stockholders' equity, operations and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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 audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the 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 financial position of Viscount Systems
Inc. as at December 31, 2001 and 2000 and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.



/s/ KPMG LLP

Chartered Accountants

Vancouver, Canada
February 8, 2002

<PAGE>
Page 1

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Consolidated Balance Sheets
(Expressed in Canadian dollars)

December 31, 2001 and 2000

================================================================================
                                                           2001        2000

Assets

Current assets:
   Cash                                               $   128,720   $    72,900
   Trade accounts receivable, less allowance for
     doubtful accounts of $111,414 (2000 - $48,032)       505,317       828,348
   Due from related party (note 4)                        115,456       194,642
   Income taxes recoverable (note 13(a))                  110,430        61,838
   Inventory (note 5)                                     561,212       534,592
   Prepaid expenses                                         3,731         6,491
   -----------------------------------------------------------------------------
                                                        1,424,866     1,698,811

Leases receivable (note 6)                                 50,328        48,297

Equipment (note 7)                                         68,705        87,934

Deferred costs                                             67,117          -
--------------------------------------------------------------------------------
                                                      $ 1,611,016   $ 1,835,042
--------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Current liabilities:
   Bank indebtedness (note 8)                         $   343,529   $   358,988
   Accounts payable and accrued liabilities               450,809       468,299
   Note payable (note 9)                                   20,000        25,000
   Deferred income taxes (note 13(b))                        -           18,106
   Term debt (note 10)                                       -           80,001
   Due to stockholders (note 11)                          448,402       513,402
   -----------------------------------------------------------------------------
                                                        1,262,740     1,463,796

Stockholders' equity:
   Capital stock (note 14)                                 20,250           100
   Additional paid-in capital (note 14)                       662          -
   Retained earnings                                      327,364       371,146
   -----------------------------------------------------------------------------
                                                          348,276       371,246
--------------------------------------------------------------------------------

                                                      $ 1,611,016   $ 1,835,042
================================================================================

Commitments (note 17)
Subsequent events (note 20)

Approved on behalf of the Board:

/s/ Greg Shen                               /s/ Stephen Pineau
-------------------------------------      -------------------------------------
Chairman                                   President and Chief Executive Officer

See accompanying notes to consolidated financial statements.

<PAGE>
Page 2

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Consolidated Statement of Stockholders' Equity
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
<TABLE>
<CAPTION>
===============================================================================================================================
                                                                                                                          Total
                                                     Common stock               Additional          Retained      stockholders'
                                              Shares            Amount             capital          earnings             equity
-------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>               <C>               <C>               <C>
Balance, December 31, 1999                 10,000,000        $       100       $      -          $   459,090       $   459,190

Loss for the year                                -                  -                 -              (87,944)          (87,944)
-------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2000                 10,000,000                100              -              371,146           371,246

Stock issued on
   recapitalization (note 3)                3,300,000             19,850            14,420              -               34,270

Stock issued for cash                         200,000                300           109,521              -              109,821

Stock issue costs                                -                  -             (123,941)             -             (123,941)

Fair value of options issued
   to non-employees for services                 -                  -                  662              -                  662

Loss for the year                                -                  -                 -              (43,782)          (43,782)
-------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2001                 13,500,000        $    20,250       $       662       $   327,364       $   348,276
===============================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>
Page 3

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Consolidated Statements of Operations
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000

================================================================================
                                                           2001        2000

Sales                                                 $ 3,238,518   $ 3,579,781
Cost of goods sold (exclusive of
   amortization shown separately below)                 1,507,012     1,764,244

Gross profit                                            1,731,506     1,815,537

Selling, general and administrative expenses            1,412,547     1,503,239
Research and development expenses (note 12)               223,140       268,691
Amortization                                               19,230        20,903
--------------------------------------------------------------------------------
                                                        1,654,917     1,792,833
                                                           76,589        22,704

Other income (expense):
   Other income                                             9,584         6,459
   Interest and bank charges                              (36,095)      (53,111)
   Interest on long-term debt                              (3,428)      (10,792)
   -----------------------------------------------------------------------------
                                                          (29,939)      (57,444)

Earnings (loss) before income taxes                        46,650       (34,740)

Income taxes (note 13):
   Current                                                108,538        39,454
   Deferred                                               (18,106)       13,750
   -----------------------------------------------------------------------------
                                                           90,432        53,204
--------------------------------------------------------------------------------

Loss for the year                                     $   (43,782)  $   (87,944)
================================================================================

Basic and diluted loss per share                      $     (0.00)  $     (0.01)
================================================================================


See accompanying notes to consolidated financial statements.


<PAGE>
Page 4

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000

================================================================================
                                                           2001        2000

Cash provided by (used in):

Operations:
   Loss for the year                                  $   (43,782)  $   (87,944)
   Items not involving cash:
     Amortization                                          19,230        20,903
     Deferred income taxes                                (18,106)       13,750
     Stock-based compensation expense                         662          -
   Changes in non-cash working capital balances
     (note 16)                                            310,243        20,406
   -----------------------------------------------------------------------------
                                                          268,247       (32,885)

Investments:
   Purchase of equipment                                     -          (39,910)

Financing:
   Deferred costs                                         (67,117)         -
   Repayment of term debt                                 (80,001)      (80,000)
   Repayment of bank indebtedness                         (15,459)         -
   Increase in bank indebtedness                             -          193,416
   Decrease in note payable                                (5,000)      (10,000)
   Issue of capital stock                                  20,150          -
   Repayment of stockholders' advances                    (65,000)       (6,498)
   -----------------------------------------------------------------------------
                                                         (212,427)       96,918
--------------------------------------------------------------------------------

Increase in cash                                           55,820        24,123

Cash, beginning of year                                    72,900        48,777
--------------------------------------------------------------------------------

Cash, end of year                                     $   128,720   $    72,900
================================================================================

Supplementary information:
Interest paid                                         $    24,268   $    30,047
Income taxes paid                                          14,345        32,004
================================================================================

See accompanying notes to consolidated financial statements.

<PAGE>
Page 5

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


1.   Operations:

     Viscount Systems Inc. (the "Company"), formerly OMW4 Corp. ("OMW4") was
     incorporated on May 4, 2001. Effective July 27, 2001, the Company underwent
     a corporate reorganization which culminated in the acquisition of all the
     voting shares of Viscount Communication and Control System Inc. ("VCCS").
     The acquisition was accounted for as a recapitalization (note 3). Following
     the acquisition, OMW4 was renamed Viscount Systems Inc. The Company
     manufactures and distributes electronic premises access and security
     equipment. The functional currency for the Company is the United States
     dollar; its self-sustaining subsidiary has a functional currency of the
     Canadian dollar. The Company has prepared these financial statements in
     accordance with United States' generally accepted accounting principles.

2.   Significant accounting policies:

     (a)   Principles of consolidation:

           The consolidated financial statements include accounts and results of
           the Company and its wholly-owned subsidiary, VCCS. All material
           intercompany transactions and balances have been eliminated.

           The consolidated financial statements for the years ended December
           31, 2001 and 2000 reflect the results of operations of VCCS and
           include the Company's operations carried on as OMW4 only from the
           effective date of the recapitalization on July 27, 2001.

     (b)   Inventory:

           Raw materials and supplies are stated at the lower of cost and
           replacement cost. Cost is generally determined on the first-in, first
           -out basis. Work in process and finished goods are stated at the
           lower of average cost and net realizable value.

     (c)   Equipment:

           Equipment is stated at cost. Depreciation is provided based on the
           estimated useful lives of the assets as follows:

           =====================================================================
           Asset                                                Basis       Rate
           ---------------------------------------------------------------------
           Computer equipment                       declining balance       30%
           Office furniture and equipment           declining balance       20%
           Manufacturing equipment                  declining balance       20%
           Leasehold improvements                       straight-line       20%
           =====================================================================

     (d)   Deferred costs:

           Deferred costs include specific incremental expenses directly
           attributable to the equity offering described in note 20. These costs
           will be recognized as a reduction in capital stock on completion of
           the equity offering.

<PAGE>
Page 6

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


2.   Significant accounting policies (continued):

     (e)   Revenue recognition:

           Revenue is recognized when there is persuasive evidence of an
           arrangement and delivery to the customer has occurred, provided the
           product does not require significant customization, the fee is fixed
           and determinable, and collectibility is considered probable. Cash
           received from customers prior to these criteria being met is recorded
           as deferred revenue.

     (f)   Government assistance and investment tax credits:

           The Company follows the cost reduction method of accounting for
           government assistance and investment tax credits ("ITC") whereby the
           estimated net recoverable amount of the benefit of the tax credits is
           recognized, when reasonable assurance exists as to their
           collectibility, as a reduction in the cost of the related capital
           asset or expenditure.

     (g)   Research and development costs:

           Research and development costs are expensed as incurred and are shown
           net of investment tax credits (note 12).

     (h)   Advertising costs:

           Advertising costs are expensed as incurred. Advertising costs
           amounted to $122,886 (2000 - $115,726).

     (i)   Deferred income taxes:

           Income taxes are accounted for under the asset and liability method.
           Deferred tax assets and liabilities are recognized for the future tax
           consequences attributable to differences between the financial
           statement carrying amounts of existing assets and liabilities and
           their respective tax bases and operating loss and tax credit
           carryforwards. Deferred tax assets and liabilities are measured
           using enacted tax rates expected to apply to taxable income in the
           years in which those temporary differences are expected to be
           recovered or settled. The effect on deferred tax assets and
           liabilities of a change in tax rates is recognized in earnings in the
           period that includes the enactment date.  To the extent that it is
           not more likely than not that a deferred tax asset will be recovered,
           a valuation allowance is provided.

     (j)   Earnings per share:

           Basic earnings per common share ("EPS") is computed by dividing
           income available to common stockholders by the weighted average
           number of common shares outstanding for the period. Diluted EPS
           reflects the potential dilution that could occur if securities or
           other contracts to issue common stock were exercised or converted
           into common stock. The weighted average number of common shares
           outstanding for computing basic and fully diluted EPS was 10,632,877
           and 10,000,000 for the years ended December 31, 2001 and 2000
           respectively. For the year ended December 31, 2001, 1,225,000 (2000
           - nil) shares attributable to the exercise of outstanding options
           were excluded from the calculation of diluted EPS because the effect
           was antidilutive. No adjustments were made to reported net income in
           the computation of income available to common stockholders.

<PAGE>
Page 7

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


2.   Significant accounting policies (continued):

     (k)   Stock-based compensation plan:

           The Company accounts for its employee stock-based compensation
           arrangements in accordance with provisions of Accounting Principles
           Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees,
           and related interpretations. As such, compensation expense would be
           recorded on the date of grant only if the market value of the
           underlying stock at the date of grant exceeded the exercise price.
           The Company recognizes compensation expense for stock options, common
           stock and other equity instruments issued to non-employees, based
           upon the fair value of the equity instruments issued, as the services
           are provided and the options earned.

           SFAS No. 123, Accounting for Stock Based Compensation, requires
           entities that continue to apply the provisions of APB Opinion No. 25
           for transactions with employees to provide pro forma net income and
           pro forma earnings per share disclosures for employee stock option
           grants made as if the fair-value-based method defined in SFAS No. 123
           had been applied to these transactions. This information is presented
           in note 14(b)(iii).

     (l)   Foreign currency translation:

           Monetary items denominated in a foreign currency are translated into
           Canadian dollars at exchange rates in effect at the balance sheet
           date and non-monetary items are translated at rates of exchange in
           effect when the assets were acquired or obligations incurred.
           Revenues and expenses are translated at an average exchange rate for
           the period. Foreign exchange gains and losses are included in loss
           for the year.

     (m)   Use of estimates:

           Management of the Company has made a number of estimates and
           assumptions relating to the reporting of assets and liabilities and
           the disclosure of contingent assets and liabilities to prepare these
           financial statements in conformity with generally accepted accounting
           principles in the United States. A significant area of estimate is
           the amount of recoverable investment tax credits (notes 12 and
           13(a)). Actual results could differ from those estimates.

<PAGE>
Page 8

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


2.   Significant accounting policies (continued):

     (n)   Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed
           Of:

           The Company accounts for long-lived assets in accordance with the
           provisions of SFAS No. 121, "Accounting for the Impairment of Long-
           Lived Assets and for Long-Lived Assets to Be Disposed Of". This
           Statement requires that long-lived assets and certain identifiable
           intangibles be reviewed for impairment whenever events or changes in
           circumstances indicate that the carrying amount of an asset may not
           be recoverable. Recoverability of assets to be held and used is
           measured by a comparison of the carrying amount of an asset to future
           net cash flows expected to be generated by the asset. If such assets
           are considered to be impaired, the impairment to be recognized is
           measured by the amount by which the carrying amount of the assets
           exceeds the fair value of the assets. Assets to be disposed of are
           reported at the lower of the carrying amount or fair value less costs
           to sell.

     (o)   Commitments and contingencies:

           Liabilities for loss contingencies, arising from claims, assessments,
           litigation, fines and penalties and other sources are recorded when
           it is probable that a liability has been incurred and the amount of
           the assessment can be reasonably estimated.

     (p)   Comparative figures:

           Certain comparative figures for 2000 have been reclassified to
           conform with the presentation adopted in the current year.

3.   Recapitalization:

     On July 27, 2001, OMW4 acquired VCCS through the issue of 10,000,000 of its
     shares for all the shares of VCCS. As the former shareholders of VCCS
     obtained control over OMW4 through the exchange of shares and OMW4 was not
     significantly active at that date, accounting principles applicable to a
     recapitalization have been applied. Such principles effectively reflect the
     identification of VCCS as the issuer of shares for consideration equal to
     the net monetary assets of OMW4. OMW4 did not commence business operations
     until July 20, 2001. At July 27, 2001, OMW4 had total net assets of $34,270
     all of which were current monetary assets.

     Capital stock on the consolidated balance sheets and statements of
     stockholder's equity have been retroactively restated to reflect the
     authorized and issued common shares related to VCCS's shareholders after
     the recapitalization effectively as if the recapitalization resulted in a
     stock split of VCCS's capital. The net earnings (loss) per share for the
     periods prior to July 27, 2001 have been calculated using a weighted
     average number of 10,000,000 shares outstanding, being the number of common
     shares issued on the recapitalization.


<PAGE>
Page 9

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


4.   Due from related party:

     The amounts due from a company with common ownership are unsecured, non-
     interest bearing, with no fixed terms of repayment.

5.   Inventory:

     ===========================================================================
                                                           2001        2000
     ---------------------------------------------------------------------------
     Raw materials                                    $   402,565   $   368,712
     Work in process                                       40,587        94,181
     Finished goods                                       118,060        71,699
     ---------------------------------------------------------------------------
                                                      $   561,212   $   534,592
     ===========================================================================

6.   Leases receivable:

     Leases receivable include amounts due from customers in monthly instalments
     on five-year leasing contracts expiring in 2003 through 2006. Contracts
     bear interest at rates ranging from 11% to 31% per annum and are secured by
     the equipment under lease.

7.   Equipment:

     ===========================================================================
                                                                            2001
                                                        Accumulated     Net book
                                            Cost       depreciation        value
     ---------------------------------------------------------------------------
     Computer equipment                 $    52,022   $    20,898   $    31,124
     Office furniture and equipment           2,792         1,484         1,308
     Manufacturing equipment                 24,651        17,235         7,416
     Leasehold improvements                  46,814        17,957        28,857
     ---------------------------------------------------------------------------
                                        $   126,279   $    57,574   $    68,705
     ===========================================================================


     ===========================================================================
                                                                            2000
                                                        Accumulated     Net book
                                            Cost       depreciation        value
     ---------------------------------------------------------------------------

     Computer equipment                 $    52,022   $    12,748   $    39,274
     Office furniture and equipment           2,792         1,072         1,720
     Manufacturing equipment                 24,651        13,554        11,097
     Leasehold improvements                  46,814        10,971        35,843
     ---------------------------------------------------------------------------
                                        $   126,279   $    38,345   $    87,934
     ===========================================================================


<PAGE>
Page 10

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


8.   Bank indebtedness:

     Bank indebtedness is drawn under a bank credit facility available for an
     operating loan to a maximum of $500,000 at prime lending rate plus 1%,
     repayable on demand. The facility is secured by a general security
     agreement.

9.   Note payable:

     The note payable bears interest at 8% per annum, is unsecured, and is
     payable on demand.

10.  Term debt:

     ===========================================================================
                                                           2001        2000
     ---------------------------------------------------------------------------
     Bank loan, with interest at prime lending
       rate plus 1.5%, repayable at $6,667
       monthly, plus interest and secured by
       a general security agreement                   $      -      $    80,001
     Current portion                                         -           80,001
     ---------------------------------------------------------------------------
                                                      $      -      $      -
     ===========================================================================

11.  Due to stockholders:

     Amounts due to stockholders are non-interest bearing, unsecured and without
     repayment terms.

12.  Research and development:

     Research and development expenditures are recorded net of investment tax
     credits recognized totaling $142,796 (2000 - $65,477).

13.  Income taxes:

     (a)   Income taxes recoverable:

           Income taxes recoverable include federal and provincial income taxes,
           offset by claims for investment tax credits based on qualifying
           research and development activity as follows:

           =====================================================================
                                                           2001        2000
           ---------------------------------------------------------------------
           Federal and provincial income taxes        $  (108,538)  $   (47,492)
           Investment tax credits recognized              218,968       109,330
           ---------------------------------------------------------------------

           Income taxes recoverable                   $   110,430   $    61,838
           =====================================================================

           Investment tax credits claimed are ultimately subject to the
           finalization of the review by Canada Customs and Revenue Agency.

<PAGE>
Page 11

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


13.  Income taxes (continued):

     (b)   Temporary differences that give rise to the following deferred tax
           assets and liabilities are as follows:

           =====================================================================
                                                           2001        2000
           ---------------------------------------------------------------------
           Deferred income tax assets:
              Equipment                               $      -      $     1,378
              Warranty provision                            3,720         5,790
              -----------------------------------------------------------------
              Gross deferred tax assets                     3,720         7,168

           Valuation allowance                             (3,338)         -
           --------------------------------------------------------------------
           Net deferred income tax assets                     382         7,168

           Deferred income tax liabilities:
              Equipment                                      (382)         -
              Investment tax credits                         -          (25,274)
            --------------------------------------------------------------------
                                                      $      -      $   (18,106)
           =====================================================================

           A valuation allowance is applied to the deferred tax asset because it
           is not more likely than not that the benefits of the deferred tax
           asset will be available to the Company.

     (c)   As a result of the recapitalization (note 3) and the acquisition of
           control of VCCS by the Company on July 27, 2001, VCCS is deemed to
           have had a taxation year end on July 26, 2001. The figures above
           reflect the taxes related to both taxation periods in the financial
           year.

           The difference between the effective rate reflected in the provision
           for income taxes and the Canadian combined statutory income tax rate
           of 38.6% applicable to manufacturing companies can be attributed to a
           reduced rate of taxation on the first $200,000 of operating income
           earned by Canadian controlled private corporations and the existence
           of certain expenditures which are not deductible for tax purposes.


<PAGE>
Page 12

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


14.   Capital stock:

     (a)   Authorized:

            100,000,000 common stock having a par value of U.S. $0.001 per share
             20,000,000 preferred stock having a par value of U.S. $0.001 per
             share

           Each share of common stock has the same rights, privileges and
           preferences. The holders of the outstanding common stock are
           entitled, in the event of liquidation, to a pro rata share of net
           assets, subject to any preferences that may be applicable on any
           preferred stock. The Board of Directors has the authority to
           determine and amend the designation, preferences, limitations and
           relative rights of preferred stock. There is no preferred stock
           issued and outstanding at December 31, 2001 (2000 - nil).

     (b)   Stock-based compensation plan:

           (i)     The 2001 Stock Option Plan serves as an equity incentive
                   program for management, qualified employees, members of the
                   Board of Directors and independent advisors or consultants.
                   The Plan became effective on December 21, 2001 and it allows,
                   at any one time, for up to 1,500,000 shares of common stock
                   to be reserved for issuance. The maximum term during which a
                   vested option may be exercised is ten years from the date of
                   grant.

                   The vesting period and the option price are determined by the
                   Compensation Committee. The option price may be set at a
                   discount to the closing price on the date of grant unless it
                   is an Incentive Stock Option.

           (ii)    The Company granted 1,255,000 options on December 21, 2001.
                   The options all have a contractual life of 10 years, an
                   exercise price of U.S. $0.65 and vest 25% on each subsequent
                   anniversary of the original grant date. As at December 31,
                   2001, no options had vested or expired and no options were
                   exercised or forfeited in the year.

                   1,180,000 of these options were awarded to eligible
                   employees. No compensation expense was recognized on the
                   grant of these options as the market value of the Company's
                   stock at the date of grant was equal to the exercise price.

                   75,000 options were granted to non-employees. The Company
                   recognized non-cash compensation expense of $662 related to
                   the issuance of these options. The fair value of each non-
                   employee option was estimated at U.S. $0.37. The compensatory
                   expense related to these options is included in selling,
                   general and administrative expenses.

<PAGE>
Page 13

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


14.   Capital stock (continued):

     (b)   Stock-based compensation plan (continued):

           (iii)   As explained in note 2(k), the Company adopted only the
                   disclosure provisions of FAS No. 123 for options granted to
                   employees under the Company's stock option plan. FAS No. 123
                   uses a fair value method of calculating the cost of stock
                   option grants. Had compensation cost for the employee stock
                   option plan been determined by this method, loss and loss per
                   share would have been as follows:

                   =============================================================
                                                                    December 31,
                                                                            2001
                   -------------------------------------------------------------
                   Loss:
                       As reported                                  $   (43,782)
                       Pro forma                                        (46,070)

                   Loss per share:
                       As reported                                        (0.00)
                       Pro forma                                          (0.00)
                   =============================================================

                   The Company has estimated the fair value of each option on
                   the date of the grant using the Black-Scholes option-pricing
                   model with the following weighted average assumptions:

                   =============================================================
                   December 31, 2001
                   =============================================================
                                        Employee options   Non-employee options
                   -------------------------------------------------------------

                   Expected dividend yield           -                     -
                   Expected stock price volatility   -                     35%
                   Risk-free interest rate           4.04%               5.44%
                   Expected life of options          3.5 years          10 years
                   -------------------------------------------------------------

                   The weighted average fair value of options granted to
                   employees during the year ended December 31, 2001 was U.S.
                   $0.10.

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Page 14

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------

15.  Financial instruments:

     The Company's financial instruments consist of accounts receivable, bank
     indebtedness, accounts payable, amounts due to/from related parties and
     long-term debt. Unless otherwise noted, it is management's opinion that the
     Company is not exposed to significant interest, currency, business
     concentration or credit risks arising from these financial instruments. At
     December 31, 2001, the largest individual amount receivable was 13.6%
     (2000 - 11%) of the total balance. The fair values of these financial
     instruments approximate their carrying values.

     The fair values of the due from related party and due to stockholders
     balances have not been determined as the Company does not believe that it
     is practicable to determine such fair values with sufficient reliability,
     due to the related party nature of the balances and the absence of a
     readily available secondary market for such financial instruments.

16.  Changes in non-cash working capital:

     ===========================================================================
                                                           2001        2000
     ---------------------------------------------------------------------------
           Accounts receivable                        $   323,031   $   (32,227)
           Due from related party                          79,186       (46,004)
           Income taxes recoverable                       (48,592)      (36,433)
           Inventory                                      (26,620)      (46,892)
           Prepaid expenses                                 2,760        17,964
           Leases receivable                               (2,032)       36,997
           Accounts payable and accrued liabilities       (17,490)      127,001
     ---------------------------------------------------------------------------
                                                      $   310,243   $    20,406
     ===========================================================================

17.  Commitments:

     The Company is committed to minimum annual payments on its premises and
     automobile leases as follows:

     ===========================================================================
     Year ending December 31:

     2002                                                           $   134,339
     2003                                                               118,411
     2004                                                                47,933
     ===========================================================================

     Rent expense included in the statements of operations is $77,006 (2000 -
     $73,996).


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Page 15

VISCOUNT SYSTEMS INC.
(Formerly OMW4 Corp.)

Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended December 31, 2001 and 2000
--------------------------------------------------------------------------------


18.  Segmented information:

     (a)   Management has determined that the Company operates in one dominant
           industry segment, which involves the manufacture and distribution of
           electronic premises access equipment.

           Of the total revenues, $1,611,182 (2000 - $1,700,652) was derived
           from U.S. based customers and $1,627,335 (2000 - $1,879,129) from
           Canadian based customers.

           Substantially all of the Company's operations, assets and employees
           are located in Canada.

     (b)   Major customers:

           No customer represented more than 10% total revenues in either of the
           two years ended December 31, 2001.

     (c)   Products:

           Enterphone sales represented 74% of total revenue in 2001 (2000 -
           79%). The balance of the Company's revenues are derived from other
           products such as access tracking and control, closed circuit
           monitors, infrared and radio frequency remotes.

19.  Related party transactions:

     (a)   During the year, the Company sold product for $218,632 (2000 -
           $259,317) to an affiliated company with common ownership, Blue
           Mountain Technologies ("BMT"). These transactions were recorded at
           the agreed exchange amount between the related parties. The
           stockholders of BMT own 18.5% of the Company's common stock.

     (b)   On October 1, 2001, the Company forgave debt of $100,140 due from BMT
           and was released from its obligation to pay a director and
           stockholder of both companies $100,140 accrued as profit share
           payable to that director.

20.  Subsequent event:

     On February 14, 2002, pursuant to a Form SB-2 registration statement, the
     Company sold 1,600,000 shares of common stock for gross proceeds of U.S.
     $1,040,000.

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