<PAGE>

                                 UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549
                                FORM 10-K

             [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR
              15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
               For the fiscal year ended December 28, 1996
                                      or
             [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
                 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from          to         
         

                          Commission File Number 0-23204
                                                 -------

                                VISTA 2000, INC.
                                ----------------
               (Exact name of Registrant as specified in its charter)

          DELAWARE                                             58-1972066
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)
  
736 Johnson Ferry Road, Building C-275, Marietta, Georgia         30068
---------------------------------------------------------       (Zip Code)
         (Address of principal executive offices)
Registrant's telephone number, including area code: (770) 971-4344
                                                    --------------

    SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                          None
                          ----

    SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                      Common Stock $.01 Par Value
                      ---------------------------
                            Series A Warrants
                                           
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 [ ]   No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of Registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. [X]

The aggregate market value of the voting stock held by nonaffiliates computed 
by reference to the price at which the stock was sold was $2,051,098 as of 
August 15 1997.  This represents 32,817,564 shares at $.0625 per share.

There were 43,510,964 shares of the Registrant's common stock and 2,300,000 
Series A Warrants and 611,127 other warrants outstanding as of August 15, 
1997. 

<PAGE>

                                        PART I

Item 1.  Business
-----------------

    Vista 2000, Inc., the registrant, together with its subsidiaries, is 
referred to herein as the "Company".  The Company's executive offices are 
located at 736 Johnson Ferry Road, Building C-275, Marietta, Georgia  30068, 
and its telephone number is (770) 971-4344. 

    All statements, other than statements of historical fact, included in 
this Annual Report, including, without limitation, the statements under 
"Current Developments", "General Business" and "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" are, or may be 
deemed to be, forward-looking statements within the meaning of Section 21E of 
the Securities Exchange Act of 1934.  Important factors that could cause 
actual results to differ materially from those discussed in such 
forward-looking statements ("Cautionary Statements") include: the general 
strength or weakness of the consumer products industry, and the pricing 
policies of competitors.  All subsequent written and oral forward-looking 
statements attributable to the Company or persons acting on behalf of the 
Company are expressly qualified in their entirety by such Cautionary 
Statements.

Current Developments

    As previously disclosed, in 1995 the Company elected to change its fiscal 
year from September 30 to December 30.  The Company engaged Grant Thornton 
LLP ("Grant Thornton") to audit its financial statements for the period 
ending December 30, 1995.  In March, 1996, Grant Thornton advised the Company 
that contrary to prior projections and previously filed financial reports, 
the Company had incurred a substantial loss for the year-end and for prior 
quarters for fiscal year 1995.  In March 1996, the Audit Committee of the 
Board of Directors (consisting of the Company's two outside (i.e. 
non-employee) directors) initiated an investigation of the integrity of the 
Company's financial reporting procedures as well as the integrity of 
management.  

    Richard P. Smyth ("Smyth") Chairman of the Board of Directors and Chief 
Executive Officer, was placed on leave of absence pending the Audit 
Committee's review.  On April 16, 1996, the Company announced Smyth's 
resignation as Chairman of the Board of Directors and Chief Executive Officer 
of the Company and the Company filed a lawsuit against Mr. Smyth, alleging, 
among other things, breach of fiduciary duty.  This litigation is currently 
pending.  

    As a result of the Audit Committee's investigation, the Company reported 
a restatement of its results for the fiscal year ending September 30, 1994.  
The Company had previously reported a loss for the period of $329,000.  The 
restated loss for this period is $2.1 million.  Further, the Company reported 
a loss for the three (3) month stub period ended December 31, 1994 of 
approximately $1 million.  The Company had reported a loss from its 
consolidated operations for the fiscal year ended December 30, 1995 of $12.9 
million or $2.04 per share based on approximately 6.3 million weighted 
average shares outstanding during the period.  This loss has been restated to 
$14.7 million or $2.33 per share as presented in the Company's Form 10-K for 
the year ended December 30, 1995.

<PAGE>

    Beginning in mid-April 1996, 17 class action lawsuits were filed against 
the Company and certain other entities and individuals relating to activities 
of the Company while under control of previous management and the previous 
Board of Directors.  All of the lawsuits were eventually consolidated. The 
lawsuits were filed in the United States District Court for the Northern 
District of Georgia, and on March 14, 1997, the litigation was settled by a 
Final Judgment and Order of Dismissal by the Court.  Further, the Company is 
being investigated by the Securities and Exchange Commission ("SEC"). (See 
Item 3 - Legal Proceedings.)

    On April 26, 1996, the Company received a letter from the NASDAQ Stock 
Market, Inc. ("NASDAQ") notifying the Company that its securities were 
scheduled to be delisted from NASDAQ effective May 10, 1996.  The Company 
requested a formal hearing on the matter which was held on May 22, 1996.  On 
May 30, 1996, the Company was advised by NASDAQ that the Company's securities 
were delisted effective May 31, 1996. The Company will not be eligible to 
trade its securities on either the Electronic Bulletin Board Market or the 
"pink sheets" market until (i) an application is made on behalf of the 
Company by a NASD member firm as a market maker for the Company's securities 
and (ii) the application is accepted by NASDAQ.  The Company has not been and 
continues not to be in a position to file its required periodic reports on a 
timely basis (Forms 10-K and 10-Q) and consequently, has not filed an 
application for listing. No assurance can be given as to if and when the 
Company will be in a position to file its required periodic reports on a 
timely basis and submit the aforementioned application to NASDAQ or, if the 
Company does file such an application, whether NASDAQ will accept it. (See 
Item 5 - Market for Registrant's Common Equity and Related Stockholder 
Matters.) 
    
    On June 7, 1996, the Company entered into an agreement with Ginarra 
Holdings, Inc. ("Ginarra") to add six (6) additional outside directors to the 
Board of Directors which, at that time, consisted of three (3) members.  
Pursuant to the terms of  the agreement, the directors amended the Company's 
bylaws to increase the size of the Board of Directors from five (5) to nine 
(9) and voted to add six (6) Ginarra nominees as directors of the Company.  
The nominees assumed office immediately following the issuance of a Form 8-K 
filed with the SEC on June 6, 1996 for the year ended December 30, 1995 in 
lieu of a Form 10-K (the "June 1996 Form 8-K").  Since that time, the three 
original directors and one of the newly-elected directors have resigned, 
currently leaving the Board with five (5) members. (See Item 10 - Directors 
and Executive Officers of the Registrant.)

    As previously disclosed in the June 1996 Form 8-K, Grant Thornton had 
disclaimed an opinion on the Company's consolidated financial statements for 
the year ended December 30, 1995 because evidence supporting the results of 
operations of the Company's subsidiaries, Family Safety Products, Inc. 
("FSPI"), Promotional Marketing, Inc. ("PMI") and Intelock Technologies, Inc. 
("Intelock") was not available. However, Grant Thornton advised that it could 
express, and the Company did receive, an unqualified opinion on the financial 
statements of the Company's subsidiary, American Consumer Products, Inc. 
("ACPI"), presented on an historical basis for twelve (12) months ended 
December 30, 1995.  Without an opinion on the Company's consolidated 
financial statements, the Company was not able to comply with the applicable 
rules and regulations of the Securities and Exchange Commission (the "SEC") 
regarding reports and The NASDAQ Stock Market, Inc. ("NASDAQ") regarding the 

                                    -2-

<PAGE>

listing of the Company's securities.  This resulted in, among other things, 
the delisting of the Company's securities from the NASDAQ National Market 
described above.

    Following the issuance of the June 1996 Form 8-K, Grant Thornton was able 
to perform additional audit procedures with respect to the fiscal year ended 
December 30, 1995. After performing these procedures, Management identified 
certain corrections that have been made to the financial statements for the 
year-ended December 30, 1995.  As a result of these corrections, on March 12, 
1997, Grant Thornton re-issued its Auditors' Report on the Company's 1995 
consolidated financial statements.  This re-issued Report of Independent 
Certified Public Accounts, which now contains an unqualified opinion of Grant 
Thornton,  was filed on May 1, 1997 with the Company's Form 10-K for the year 
ended December 30, 1995.

General

    The Company, successor by merger to Firearm Safety Products, Inc. 
("Firearm"), was organized to design, develop, manufacture and market 
consumer products. Firearm was organized on December 19, 1991 as 
Triggerguard, Inc., a Georgia corporation. Effective August 10, 1992, 
Triggerguard's name was changed to Firearm Safety Products, Inc.  Pursuant to 
a Plan and Agreement of Merger entered into October 20, 1993, Firearm was 
merged into the Company, a newly formed Delaware corporation. In conjunction 
with the plan of merger, FSPI, a Georgia corporation, was formed as a 
wholly-owned subsidiary of the Company, and the assets and operations of 
Firearm were transferred to FSPI.  FSPI manufactured and marketed a broad 
range of personal safety and home security devices, alarms and security 
systems.   On October 24, 1994, the Company completed an initial public 
offering of its common stock and warrants.

Acquisitions and Dispositions

    Effective May, 1995, the Company acquired all of the outstanding stock of 
PMI for a total of $610,000 exclusive of acquisition costs.  PMI provided 
direct marketing services to a variety of customers.  The acquisition was 
accounted for as a purchase using the equity method of accounting.  Effective 
November 30, 1995, PMI sold substantially all of its assets to a company 
owned by the former principals of PMI.  Effective September 15, 1996, the 
Company sold the remaining assets of PMI.

    Effective June 30, 1995, the Company acquired 94% of the outstanding 
shares of Intelock, a California manufacturer of digital lock mechanisms with 
distribution through major homecenter and hardware retailers nationwide. The 
balance of the shares were retained by a former officer and a former employee 
of Intelock.  The Company exchanged 69,200 shares of its Common Stock, 
138,400 warrants and $5,000 cash for the common stock of Intelock and 
exchanged an additional 150,000 shares of the Company's Common Stock for 
molds integral to the manufacturing process which were held by a company 
affiliated to the previous owner. Intelock's results from operations 
subsequent to June 30, 1995 are included in the Company's consolidated 
financial statements. 

                                   -3-

<PAGE>

    Effective July 31, 1995, the Company acquired all of the stock of 
Alabaster Industries, Inc. ("Alabaster").  Alabaster is an Alabama company 
specializing in the manufacture of injection molded plastics products for the 
housewares industry with a distribution network of national retailers. The 
Company's total purchase consideration was 400,000 shares of the Company's 
Common Stock.  The sum of $4.8 million was paid in cash to satisfy certain 
debt instruments of Alabaster held by a regional bank.  The Company issued 
and sold shares of Class D Convertible Preferred Stock pursuant to an 
exemption from registration pursuant to Regulation "S" of the Securities Act 
of 1933 (the "Act") to fund the cash portions of the acquisition. Liabilities 
of Alabaster assumed by the Company were $4.1 million.  Alabaster's results 
from operations subsequent to July 31, 1995 are included in the Company's 
consolidated financial statements. 

    Effective September 30, 1995, the Company acquired the outstanding common 
stock of ACPI through a cash tender offer. On that date, employment 
agreements were executed with principals who controlled 51% of ACPI's 
outstanding shares, and agreements to purchase certain real estate occupied 
by ACPI were obtained. The Company's total purchase consideration was $14.2 
million in cash.  The Company entered into an agreement with related parties 
of ACPI to acquire facilities occupied by ACPI and its operating subsidiary, 
Boss Manufacturing, Inc. ("Boss Manufacturing"), for approximately $7.0 
million, consisting of a cash payment of approximately $2.7 million and 
assumptions of liabilities of approximately $4.3 million to be made on or 
before June 28, 1996.  ACPI manufactures and distributes consumer hardware 
products, including key blanks, key related accessories, knives, letters, 
numbers and signs, driveway markers, snow shovels and pet products, as well 
as gloves and other items through its Boss Manufacturing subsidiary, which 
are sold by ACPI's national field sales force to hardware, mass merchandise, 
and Do-It-Yourself retailers across the United States. The Company issued and 
sold shares of Class C and D Convertible Preferred Stock pursuant to an 
exemption from registration pursuant to Regulation "S" of the Act to fund the 
cash portion of the purchase price for the stock of ACPI. ACPI's results from 
operations subsequent to September 30, 1995 are included in the Company's 
consolidated financial statements.  

    In May 1996, ACPI sold the inventory, tooling and other supplies of a 
product line for $1.1 million in cash.  The sale resulted in a gain of 
$472,000.

    On August 23, 1996, the Company sold substantially all of the assets of 
its subsidiary, FSPI.  The consideration for the sale consisted of $1.8 
million in cash a $100,000 note and assumption by the purchaser of $2.7 
million in trade accounts payable.  The Company applied the cash portion of 
the consideration toward its working capital requirements.  The sale resulted 
in a loss of approximately $9 million by the Company.

    In September, 1996, the Company closed operations of its Intelock 
subsidiary due to its continued unprofitability and a lack of working 
capital.  The resulting charge to earnings was approximately $660,000 
representing a write down of assets to net realizable value.  In April 1997, 
the Company sold all of its stock in Intelock. (See Part II, Item 7 
"Significant Subsequent Events")

                                   -4-

<PAGE>

Marketing

    The Company markets its product lines directly through its own sales 
force to major retail stores and through distributors and manufacturer 
representatives. Products are primarily purchased from the Company by 
businesses located in the United States, including mass merchandising stores, 
supermarkets, hardware stores, drug and variety stores, and other retail 
outlets and by wholesalers who resell to such retailers. The Company's 
products are also marketed outside the United States in Canada. 

Product Development

    Through its wholly-owned subsidiary, ACPI, the Company maintains an 
engineering and development department to conduct research activities 
relating to the improvement of existing products and the development of new 
products.

    ACPI's technical, marketing, and manufacturing staff are responsible for 
the development of a computerized key duplication machine.  The machine is 
designed to minimize operator training and common mistakes that lead to 
mis-cut keys.  The machine uses a digital CCD camera to scan the original key 
to determine the appropriate blank to use and also digitizes the combination 
cut into the key.  The machine instructs the operator to select the 
appropriate key blank and insert it into the machine.  The machine then 
aligns, grips, and cuts the key automatically.  This machine is intended to 
be deployed in stores where a high volume of keys are sold and minimizing 
operator training is an issue.  Development of the machine continued 
throughout 1996, and is expected to continue through July 1997.

Raw Material

    The Company expects to have multiple sources of supply for substantially 
all of its material requirements. The raw materials and various purchased 
components required for its products have generally been available in 
sufficient quantities. 

Patents

    The Company holds a number of patents on various inventions and has 
several patents pending, but the overall business is not dependent upon any 
single patent or group of patents. 

Competition

    The Company competes with a number of well-established domestic and 
foreign manufacturers that serve the markets for its products. Many of the 
Company's products also compete against a number of substitute products. 
Although the available information does not permit the Company to form a 
reliable opinion as to its precise competitive position within these markets, 
the Company believes it has a significant share in many of the markets for 
some of its products. 

                                   -5-

<PAGE>

Regulation

    The Company is subject to federal, state and local regulations concerning 
the environment, occupational safety and health, and consumer products 
safety. The Company has not experienced significant difficulty in complying 
with such regulations and compliance has not had a material adverse effect on 
the Company's business. All of the Company's electric-powered products are 
listed by Underwriters Laboratories, Inc., which is an independent, 
not-for-profit corporation engaged in the testing of products for compliance 
with certain public safety standards. 

Employees

    The Company has approximately 1,375 full-time associates including 190 
salaried personnel. Hourly associates are represented by a labor 
organizations under collective bargaining agreements at the Company's ACPI, 
Boss Manufacturing, and Alabaster facilities. 

Executive Officers of the Registrant

    The following is a list of the names and ages of all the executive 
officers of the registrant and principal subsidiaries as of December 28, 1996 
indicating all positions and offices with the registrant held by each such 
person, and each such persons' principal occupations or employment during the 
past five years. 

                                   -6-

<PAGE>

                                 THE REGISTRANT
 
<TABLE>
<CAPTION>
                                                                           POSITIONS AND OFFICES HELD AND
                                                                     PRINCIPAL OCCUPATIONS OR EMPLOYMENT DURING
NAME                                                   AGE                          PAST 5 YEARS
---------------------------------------------  -------------------  ---------------------------------------------
<S>                                            <C>                  <C>
 
G. Louis Graziadio III                                 47           Chairman of the Board and Chief Executive
                                                                    Officer since June 1996.He is also the
                                                                    Chairman and CEO of Ginarra Holdings, Inc., a
                                                                    holding company with investments through
                                                                    various corporations, and a director of
                                                                    Imperial Credit Industries, Inc., Imperial
                                                                    Bancorp, Imperial Trust, Imperial Financial
                                                                    Group and Lynx Golf, Inc. (1)

                                  SUBSIDIARIES

Stephan Cole                                           49           Chief Executive Officer, ACPI Subsidiary (2)

Richard Bern                                           49           President, ACPI Subsidiary (2)

Daniel Norris                                          39           President, Alabaster Subsidiary

</TABLE>
 
------------------------
 
(1) On June 6, 1996, the duties of Chairman of the Board and Chief Executive  
    Officer were assumed by G. Louis Graziadio, III, who, as of the date of 
    this Report, is the only executive officer of the Company.
 
(2) Messrs. Bern and Cole terminated their employment agreements and resigned
    their positions effective May 7, 1997. Under their severance agreements,
    they will continue with ACPI in consulting capacities through the end of
    1997. Mr. Ken Fristad, the current President of ACPI's subsidiary, Boss
    Manufacturing, Inc., assumed their duties effective May 7, 1997.
 
ITEM 2. PROPERTIES
 
    The following table shows the location, general character, square 
footage, annual rent and lease expiration date of the principal operating 
facilities owned or leased by the Company as of December 28, 1996. The 
executive offices are located in Marietta, Georgia, which is a leased 
facility occupying approximately 4,800 square feet. The Company considers its 
properties to be in generally good condition and well-maintained, and are 
generally suitable and adequate to carry on the Company's business.

                                   -7-

<PAGE>

<TABLE>
<CAPTION>

                                     GENERAL                     SQUARE           ANNUAL            LEASE
LOCATION          CITY              CHARACTER                     FEET             RENT           EXPIRATION
------------  ------------  ----------------------------  -------------------  ------------  -------------------
    <S>           <C>                  <C>                        <C>                 <C>            <C>

Alabama       Alabaster     Manufacturing and                    162,300             n/a            owned
                            Administrative Office

Alabama       Greenville    Manufacturing                         86,000             n/a            owned

Alabama       Monroeville   Manufacturing                          5,000         $  3,600        month-to-month

Arizona       Phoenix       Manufacturing                         68,600         $179,172           05/14/98

Br.Columbia,  Vancouver     Manufacturing                          6,000         $ 14,400            unknown
 Canada

Florida       Hollywood     Manufacturing                         15,000         $ 90,000            12/31/98

Georgia       Marietta      Administrative Office                  4,800         $ 28,800        month-to-month

Illinois      Kewanee       Manufacturing and                     50,400             n/a              owned
                            Administrative Office
                                    

Illinois      Springfield   Manufacturing                         80,000         $159,500             06/30/99

Mexico        Juarez        Manufacturing                         35,400             n/a              owned

Minnesota     Burnsville    Manufacturing                          9,070          $ 38,448            09/30/98

Ohio          Solon         Manufacturing                        202,000             n/a              owned

Ontario,      Concord       Manufacturing                         18,400          $ 62,560        month-to-month
 Canada

Texas         El Paso       Manufacturing                          1,770          $ 11,664            02/28/96

Washington    Kent          Warehouse                             25,000          $ 66,000        month-to-month
</TABLE>
 
ITEM 3. LEGAL PROCEEDINGS.
-------------------------
 
    The Corporation is involved in various lawsuits in the ordinary course of 
business. These lawsuits primarily involve claims for damages arising out of 
commercial disputes.
 
    During the period from April 1, 1996 through June 30, 1996, the Company, 
together with certain former officers, former directors and third parties, 
was named as a defendant in seventeen (17) class action lawsuits filed by 
persons and entities who purchased the common stock and warrants of the 
Company during the period of November 11, 1994 through and including April 
15, 1996, in the United States District Court for the Northern District of 
Georgia. On July 9, 1996, the District Court ordered that the Complaints be 
consolidated for all purposes. On July 23, 1996, plaintiffs filed a 
consolidated class action complaint ("Complaint") alleging violations of 
Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 
promulgated thereunder, and an

                                   -8-

<PAGE>

additional claim under Georgia common law for alleged negligent 
misrepresentations. The Complaint named as defendants the Company: Richard P. 
Smyth ("Smyth"), the former Chairman of the Board and Chief Executive Officer 
of the Company; Arnold E. Johns ("Johns"), formerly President and a director 
of the Company; Roemmich & Seymour, PC ("R&S"), the Company's former outside 
auditor; and the principals of R&S, Roger Roemmich ("Roemmich") and J. Allen 
Seymour ("Seymour").
 
    The Complaint alleged that throughout the period from November 11, 1994 
through April 15, 1996, the Company issued materially false and misleading 
financial statements that caused the market price of the Company's securities 
to trade at artificially inflated prices.
 
    On August 29, 1996, the District Court certified plaintiffs as 
representatives of a class of all persons who purchased the Company's common 
stock and/or warrants during the period from October 24, 1994 through June 8, 
1996 (the "Class") except the defendants, all former officers and former 
directors and employees of the Company, all underwriters of the Company's 
initial public offering, members of the immediate families of each of the 
foregoing and any person, firm, trust, corporation, officer, director or 
other individual or entity in which any of the defendants has a controlling 
interest or which is related to or affiliated with any of the defendants, and 
the legal representatives, heirs, successors-in-interest or assigns of the 
Class as well as all individuals or entities who acquired Vista common stock 
and/or warrants through Vista's employee profit sharing, retirement, benefit 
or incentive program. Current officers and directors are not excluded from 
the Class, so long as they meet the requirements for participation.

    On March 14, 1997, a settlement was confirmed by the entry of a Final 
Judgment and Order of Dismissal with Prejudice. The settlement provides, 
among other things, that the Company will issue shares of its common stock 
(and provide certain anti-dilution protection) to the plaintiffs and the 
Class in order to convey ownership of 40% of the Company's common stock. In 
addition, the settlement provides that additional common shares will be 
issued to the Class to maintain its 40% ownership interest in the Company if 
the Company's outstanding convertible preferred stock is converted to common 
stock at less than $1.35 per common share for the Series C preferred or $1.19 
per common share for the Series A and D preferred. Furthermore, additional 
shares will also be issued, if the Company's management is issued common 
stock through the Company's stock option plan, resulting in management 
acquiring more than 20% of the common stock of the Company. The number of 
shares to be issued under the terms of this settlement is approximately 
14,226,000 The Company's insurance carrier also contributed $300,000 to the 
settlement. The settlement is in satisfaction of all claims of the Class.
 
    The SEC notified the Company in April 1996 that it had commenced an 
informal investigation of the Company. The status of the investigation was 
changed to a formal private investigation in January, 1997. The Company has 
responded to the SEC's request for information and will continue to cooperate 
with the SEC in this matter. Independently, the Company through its Audit 
Committee has conducted an internal investigation of the facts and 
circumstances surrounding the investigation. (See Item 1 - "Business-- 
Current Developments".)

                                   -9-

<PAGE>
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 
-----------------------------------------------------------

There were no matters submitted to a vote of security holders during the year 
ended December 28, 1996, as neither an annual meeting was held nor a proxy 
statement issued during 1996.

                                   -10-

<PAGE>
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
-----------------------------------------------------------------------------

    The Company's common stock (symbol: VISTE) was traded on the National 
Association of Securities Dealers Automated Quotation System ("NASDAQ") until 
May 31, 1996, when the Company's stock was delisted. (See Item 
1--"Business-Current Developments") The following table sets forth the range 
of high and low bid prices for the Company's Common Stock as quoted by 
NASDAQ. These quotations represent prices between dealers in securities, do 
not include retail mark-ups, mark-downs or commissions and do not necessarily 
represent actual transactions.
 
<TABLE>
<CAPTION>

                                            FISCAL YEAR ENDED         FISCAL YEAR ENDED       OCTOBER 25, 1994 THRU
                                           DECEMBER 28, 1996(1)       DECEMBER 30, 1995         DECEMBER 31, 1994

            QUARTER                          HIGH BID      LOW BID     HIGH BID     LOW BID    HIGH BID     LOW BID
--------------------------------------     -----------  -----------  -----------  ---------  ----------    ---------
<S>                                             <C>          <C>          <C>         <C>        <C>          <C>
 
First.................................      14-7/8        8-1/2        2-5/8        1-1/2              N/A
 
Second(2).............................      10-1/8        1-7/16       6-9/32       1-15/16            N/A
 
Third.................................              N/A                7-3/8        5-3/16             N/A
 
Fourth................................              N/A               10-1/2        4-5/8        3-15/16       2-1/2
</TABLE>

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

(1) On December 28, 1996 there were in excess of 1000 record holders of the
    Company's common stock. Holders of Common Stock are entitled to dividends
    when, as, and if declared by the Board of Directors out of funds legally
    available therefore. The Company has not paid any cash dividends on its
    Common Stock and, for the immediate future, intends to retain earnings, if
    any, to finance the development and expansion of its business.
 
(2) Represents market prices second quarter through May 31, 1996, the date the
    stock was delisted.
 
ITEM 6. SELECTED FINANCIAL DATA.
 
    The selected consolidated financial data of the Company shown below for 
the four year and three month period ended December 28, 1996 are derived from 
the consolidated financial statements of the Company. The information set 
forth below is qualified in its entirety by the more detailed financial 
statements and notes thereto included elsewhere herein together with the 
reports issued by the independent certified public accounts. The following 
table should be read in conjunction with Management's Discussion and Analysis 
of Results of Operations and Financial Condition and the Company's audited 
Consolidated Financial Statements and Notes thereto appearing elsewhere 
herein.

                                  -11-

<PAGE>

<TABLE>

<CAPTION>

               CONSOLIDATED                                                            3
              BALANCE SHEET                           YEAR                YEAR       MONTHS       YEAR        YEAR
               DATA (AS OF                            ENDED              ENDED       ENDED       ENDED       ENDED
               PERIOD END)                          12/28/96            12/30/95    12/31/94    9/30/94     9/30/93
------------------------------------------  -------------------------  ----------  ----------  ----------  ----------
            <S>                                         <C>               <C>         <C>         <C>         <C>

                                                     (AMOUNTS IN THOUSANDS EXCEPT SHARES AND PER SHARE DATA)
                                            -------------------------------------------------------------------------


Working capital (deficit).................        $   30,587           $ 30,393      $    (212)  $ (3,235)     $    (566)

Total assets..............................            61,771             65,311          1,597      1,430          1,583

Long-term debt, including current.........            24,302             23,636            695      1,036            761

Stockholders' equity (deficit)............            24,161             21,125             (9)    (3,178)          (817)

Consolidated Statement of Operations Data 

Net sales.................................        $  110,955           $ 32,422      $       1   $    137      $     745

Cost of sales.............................            82,563             28,244             26        314            593

 Gross profit (loss).......................           28,392              4,178            (25)      (177)           152

Operating expenses........................            34,235             17,318            858      1,721          2,448

Loss from Asset...........................           (10,787)              --              --        --             --
Sales/Writedowns 

Loss from disposed business...............               --              (1,147)           --        --             --

 Operating loss............................          (16,630)           (14,287)          (883)    (1,898)       (2,296)
 
Interest expense..........................           (2,174)               (649)          (143)      (266)         (231)
 
Other income (expense)....................             (351)                273              4         45           --
 
Net loss before Income Taxes..............          (19,155)            (14,663)        (1,022)    (2,119)       (2,527)
 
Income Tax Expense........................             (246)                --             --         --            --
  
 Net loss..................................      $  (19,401)           $(14,663)     $  (1,022)  $ (2,119)    $  (2,527)
 
Loss per share............................       $    (1.20)           $  (2.33)     $  (0.36)   $  (0.99)    $   (1.28)
                                                               
Weighted average shares outstanding.......       $   16,133,508         6,294,361     2,813,293   2,131,226    1,970,706
</TABLE>

                                  -12-

<PAGE>

Item 7.   Management's Discussion and Analysis of Financial Condition and 
Results of Operations

OVERVIEW

    The Company reported a net loss of $19.4 million or a $1.20 loss per 
share for the year ended December 28, 1996 compared to a net loss of $14.7 
million or $2.33 loss per share for the year ended December 1995 compared to 
net loss of $1.0 million or $.36 loss per share for the three month period 
ended December 31, 1994 and net loss of $2.1 million or $.99 loss per share 
for the year ended September 30, 1994.

    The 1996 loss is primarily attributable to substantial losses on the sale 
of the assets of FSPI and write-down of the assets of Alabaster and Intelock. 
 In addition, high general overhead costs were incurred in the operation of 
the Company's corporate offices.  The Company's substantial growth as 
discussed below resulted from two significant acquisitions during 1995.  The 
loss for the year ended December 30, 1995 was primarily attributable to 
acquisition and reorganization costs, inventory liquidations below normal 
selling prices, production start-up costs, related material and manufacturing 
costs, and high general overhead costs.  The loss for the three month period 
ended December 31, 1994 is primarily due to low levels of business 
operations.  The loss for the year ended September 30, 1994 is primarily due 
to low levels of business operations during the time when Vista was actively 
pursuing an initial public offering.

RESTATEMENT OF FINANCIAL STATEMENTS OF PRIOR PERIODS

Financial Statements for the Year ended September 30, 1994

    The audited financial statements previously issued for the year ended 
September 30, 1994 have been restated to reflect two prior period accounting 
adjustments. First, previously recognized revenue from the sale of an 
exclusive license agreement for one of the Company's products, consideration 
for which was substantially in the form of a $1.2 million note receivable, 
has been reversed as a result of a 1996 investigation initiated by the Audit 
Committee of the Board of Directors. Second, $635,000 of previously 
reported sales have been reversed also as a result of the Audit Committee 
investigation referred to above.  The effects of these two prior period 
adjustments on operations results in a reduction of revenue, an increase in 
net loss and an increase in accumulated deficit all in the amount of $1.8 
million.

Quarterly Reports filed on Forms 10-Q

    The unaudited interim financial statements filed on Forms 10-Q for the 
quarters ended December 31, 1994, March 31, 1995, June 30, 1995 and September 
30, 1995 have been amended.  These amendments were necessary to properly 
reflect certain year-end 1995 adjustments, correct accounting errors 
determined as a result of the audit of the December 30, 1995 financial 
statements,

                                   13

<PAGE>

and record the prior period accounting adjustments referred to above related 
to the September 30, 1994 financial statements. The individual quarterly 
effects of the adjustments for the respective comparative quarters have been 
reported in the Company's Forms 10-Q for the quarters ending March 30, 1996, 
June 29, 1996 and September 28, 1996, which were filed on May 1, 1997. 
Descriptions of the nature of these adjustments are as follows:

    -    The effective date of the acquisition of PMI by Vista was not 
         October 31, 1994 as previously reported but instead, May 1, 1995, 
         immediately prior to the closing date of the acquisition in May
         of 1995.

    -    The effective date of the acquisition of Alabaster by Vista was not
         May 1, 1995 as previously reported but instead, the closing date of
         the acquisition was on July 31, 1995.

    -    The effective date of the acquisition of ACPI by Vista was not 
         August 31, 1995 as previously reported but instead, September 30, 1995,
         subsequent to the initiation of the tender offer through which Vista
         achieved majority ownership and control of ACPI.

    -    Inventory costing adjustments necessary to properly state year-end FSPI
         inventories, in large part, related to the previously reported 
         quarterly results. During prior quarters cost of goods sold for FSPI 
         was artificially computed to be approximately 52% of net sales.  Upon
         examination of the actual costs of products sold by FSPI it was 
         determined that costs as a percentage of net sales was much higher
         than the 52% factor used in computing the quarterly gross profit
         amounts.

    -    Accruals for various stock-based compensation costs were not recorded
         in the quarterly results.

RESULTS OF OPERATIONS

Consolidated

    Net sales were $111.0 million for the year ended December 28, 1996 
compared to $32.4 million for the year ended December 30, 1995.  The increase 
is primarily a result of the inclusion of  a full year's operating results of 
ACPI and Alabaster, both of which were acquired during 1995.

    Gross profit was $28.4 million for the year ended December 28, 1996     
compared to $4.2 million for the year ended December 30, 1995.  The increase 
is primarily a result of the acquisitions of ACPI and Alabaster during 1995.  
Gross profit was 25.6% of net sales for the year ended December 20, 1996 
compared to 12.9% of net sales for the year ended December 30, 1995.  Gross 
profit in 1996  improved as a result of having a full year's results for ACPI 
versus three months in 1995, substantially mitigating gross profit losses at 
FSPI.

    Operating expenses were $34.2 million for the year ended December 28, 
1996 compared to $17.3 million for the year ended December 30, 1995.  The 
increase is primarily a result of the acquisitions of ACPI and Alabaster, and 
growth of parent company operations at Vista.  Operating 

                                   14
<PAGE>

expenses were 30.8% of net sales for the year ended December 28, 1996 
compared to 53.4% of net sales for the year ended December 30, 1995. 

    Net loss for the year ended December 28, 1996 was $19.4 million compared to
$14.7 million for the year ended December 30, 1995.

Separate Company Analysis

    Following is an analysis of results of operations on a separate company 
basis using financial data included in the consolidated financial statements.

Vista and FSPI (combined)

    Sales were $2.9 million for the year ended December 28, 1996, compared to 
$2.0 million for the year ended December 30, 1995, $1,000 for the three month 
period ended December 31, 1994 and $137,000 for the year ended September 30, 
1994.  The increase in sales in 1996 is due to 1996 consisting of eight 
months of sales of gas detection devices while 1995 represented only three 
months of these sales.  The increase in sales in 1995 compared to the prior 
periods is due to introduction of FSPI home safety and security products 
during 1995.  These include home gas detection devices, home security devices 
and other related products.

    Gross profit (loss) was $(764,000) or (26.2%) for the year ended December 
28, 1996, $(3.15) million or (157.5%) for the year ended December 30, 1995, 
$(25,000) for the three month period ended December 31,1994 and $(177,000) 
for the year ended September 30, 1994.  The 1996 loss is due to a number of 
factors, the most significant of which are:

    -    Excessive production costs related to gas detection products primarily
         caused by product rework, excessive direct labor costs, high indirect
         labor and engineering costs and high manufacturing overhead costs.

    -   Shrinkage caused by loss of control over costs and quantities of
        physical inventories, primarily manufactured goods.

    The losses for the three months ended December 31, 1994 and the year 
ended September 30, 1994 are primarily due to the early stage of the Company, 
low volume and high overhead costs.

    Operating expenses were $9.2 million for the year ended December 28, 1996 
compared to  $9.7 million for the year ended December 30, 1995, $858,000 for 
the three months ended December 31, 1994 and $1.7 million for the year ended 
September 30, 1994.  Operating expenses during 1996 decreased primarily as a 
result of reduction in staffing at the Company's corporate office.  The 
increase in operating expenses during 1995 was due to higher sales volumes, 
increased marketing and promotional costs, increased research and development 
costs, costs associated with start-up of full production operations for gas 
detection devices at FSPI, growth of parent company operations including 
executive and management staff at the parent company, equity based 
compensation awards

                                   15

<PAGE>

at the parent company, and other less individually significant items.  
Operating expenses were 324% of net sales for the year ended December 28, 
1996 compared to 485% of net sales for the year ended December 30, 1995.

    Net loss was $19.0 million, $13.7 million, $1.0 million and $2.1 million 
for the year ended December 28, 1996, the year ended December 30, 1995, the 
three months ended December 31, 1994 and the year ended September 30, 1994, 
respectively.  The net loss for 1996 includes a $8.8 million loss on the sale 
of substantially all of the operating assets of FSPI.

Intelock

    Sales were $262,000 for the year ended December 28, 1996 compared to 
$480,000 for the period from June 30, 1995 (acquisition date) to December 30, 
1995.  Sales in 1996 were reduced as the Intelock operations wound down and 
eventually ceased operating in the third quarter of 1996.  Sales volumes in 
1995 were lower than anticipated due to product quality and reliability 
problems resulting in significant returns and customer credits. 

    Gross profit (loss) was $(32,000) or (12.2%) of sales for the year ended 
December 28, 1996 compared to ($6,000) or  (1.2%) for the period from June 
30, 1995 (acquisition date) to December 30, 1995.  The loss is primarily due 
to low volume levels, product returns, excessive customer credits and 
allowances related to product quality issues and inventory obsolescence 
reserves.

    Operating expenses were $207,000 for the year ended December 28, 1996 
compared to $537,000 for the period from June 30, 1995 (acquisition date) to 
December 30, 1995.  Decreased operating expenses were primarily due to the 
winding down of Intelock operations.

    Net loss was $896,000 for the year ending December 28, 1996, compared to 
$543,000 for the period from June 30, 1995 (acquisition date) to December 30, 
1995. The 1996 loss includes a loss of $659,000 on writing down assets to net 
realizable value.

Alabaster

    Sales were $8.9 million for the year ended December 28, 1996 compared to 
$3.9 million for the period from July 31, 1995 (acquisition date) to December 
30, 1995. 

    Gross profit was $723,000 or 8.1% of net sales for the year ended 
December 28, 1996 compared to $142,000 or 3.6% for the period from July 31, 
1995 (acquisition date) to December 30, 1995.  Gross profit in 1995 was 
negatively impacted by liquidations of excess and slow moving inventory which 
were not in accordance with management's sales and distribution strategies.  
Additionally, inventory costs in 1995 were high due to low manufacturing 
capacity utilization during the period.  1995 gross profit was also impaired 
due to valuation reserves necessary to absorb losses sustained from 
additional liquidations of 1995 year-end inventories during the first quarter 
of 1996.

                                   16
<PAGE>

    Operating expenses were $2.3 million for the year ended December 28, 1996 
compared to $1.2 million for the period from July 31, 1995 (acquisition date) 
to December 30, 1995.  Operating expenses were 25.6% of net sales for the 
year ended December 28, 1996 compared to 30.8% of net sales for the period 
from July 31, 1995 (acquisition date) to December 30, 1995.  Operating 
expense decrease was achieved primarily through reductions in administrative 
staffing.

    Net loss was $3.6 million for the year ended December 28, 1996 compared 
to $1.1 million for the period from July 31, 1995 (acquisition date) to 
December 30, 1995. The 1996 loss included a loss of $1.8 million on the write 
down of assets to net realizable value.

ACPI

    Sales for the year ended December 28, 1996 were $100 million compared to 
$105 million for the year ended December 30, 1995 (including amounts which 
are not included in the consolidated financial statements of Vista 2000, 
Inc.)  Sales were $26.0 million for the period from September 30, 1995 
(acquisition date) to December 30, 1995.  The decline in sales was primarily 
attributable to a reduction in sales of the KA-BAR product line and the loss 
of one half of Wal-Mart's key business.  The loss of the Wal-Mart key 
business was due to the introduction by an ACPI competitor of improved key 
identification and cutting technology.  In an effort to meet this competitive 
challenge, ACPI has developed a computerized key duplication machine (see 
Item 1 - Business - Product Development).

    Gross profit for the year ended December 28, 1996 was $28.5 million or 
28.4% compared to $26.9 million or 25.6% for the year ended December 30, 1995 
(including amounts which are not included in the consolidated financial 
statements of Vista 2000, Inc.)  Gross profit was $7.2 million or 27.6% for 
the period from September 30, 1995 (acquisition date) to December 30, 1995.

    Operating expenses were $22.7 million for the year ended December 28, 
1996 compared to $25 million for the year ended December 30, 1995 (including 
amounts which were not included in the consolidated financial statements for 
Vista 2000, Inc.) Operating expenses were $6.0 million for the period from 
September 30, 1995 (acquisitions date) to December 30, 1995.  Operating 
expenses were 22.6% and 23.8% of net sales for the years ended December 28, 
1996 and December 30, 1995 respectively. Operating expenses for the period 
September 30, 1995 to December 30, 1995 were 23.1% of net sales.  Operating 
expenses for the year ended December 28, 1996 were favorably affected by 
certain purchase accounting adjustments, primarily those related to valuation 
of long-term assets, which result in significant decrease in annual 
depreciation on existing assets.  Operating results were also favorably 
affected by reductions in operating cost from fewer employees in 1996, saving 
$750,000.

    Pretax income (loss) was $4.2 million for the year ended December 28, 
1996 and ($774,000) for the year ended December 30, 1995 (including amounts 
which were not included in the consolidated financial statements of Vista 
2000, Inc.)  Pre-tax income for the period from September 30, 1995 
(acquisition date) to December 30, 1995 was $620,000.

                                   17

<PAGE>

FINANCIAL CONDITION

Consolidated

    Consolidated working capital at December 28, 1996 was $30.6 million 
exclusive of the $20.4 million ACPI revolver debt which matures in April 
1997.   The ACPI credit facility was replaced in May 1997.  The new loan 
agreement expires in May, 2000.

    During 1996, Vista raised approximately $21.2 million, net of issuance 
costs, through convertible preferred stock offerings and common stock 
offerings issued pursuant to the exemption from registration of Regulation S 
under the Act.  The proceeds of these offerings were used to fund operating 
losses and working capital requirements.

    Regarding the use of the Company's income tax loss carryforward, the 
Company has experienced a change in control, as defined under Section 382 of 
the Internal Revenue Service Code, during 1995 and 1996.  Additionally, 
management expects another change in control to occur during 1997 upon 
issuance of the common stock in settlement of the class action lawsuit 
described in Part I, Item 3.  As a result, the utilization of a significant 
portion of the tax loss carryforwards will be limited on an annual basis and 
could expire unused.

Separate Company Analysis

ACPI

    $30.0 million of consolidated working capital is from ACPI.  As of 
December 28, 1996, ACPI had $8.5 million available under its $28.9 million 
revolving line of credit.  Borrowings under the line of credit are based on a 
formula which includes eligible accounts receivable and inventories.  The 
line of credit bears interest at the base rate plus 3/8% (8.625% at December 
28, 1996) and is collateralized by accounts receivable, inventories and 
equipment and is guaranteed by each of ACPI's subsidiaries.  The ACPI 
revolving credit facility does not provide for intercompany advances to 
non-ACPI Vista affiliates other than for payment of dividends and trading 
transactions occurring through the normal course of business.

    The existing line of credit was replaced on May 7, 1997 with a new line 
of credit in the total amount of $30 million.  The line bears interest at the 
prime rate plus .5% or LIBOR plus 2.5% and is collateralized by accounts 
receivable, inventory, equipment and real estate.  Borrowings under the line 
of credit are based on a formula which includes eligible accounts receivable 
and inventories.  The revolving credit facility provides for intercompany 
advances to non-ACPI Vista affiliates based upon a percentage of excess cash 
flow as defined in the credit agreement.

                                   18

<PAGE>

Alabaster

    Working capital at Alabaster at December 28, 1996 was $500,000.  In 
September 1996, Alabaster entered into a revolving credit and demand loan 
agreement.  The amount of the credit is $2.5 million.  As of December 28, 
1996, availability under the credit agreement was $1.25 million of which 
$908,000 had been borrowed.  Interest is at the greater of 9% or prime plus 
3-1/4%.  The agreement is secured by substantially all of the assets of 
Alabaster and is guaranteed by Vista.  The agreement expires September, 1998.

Parent Company, FSPI and Intelock ("Vista Group")

    Working capital at the Vista Group at December 28, 1996 was $100,000.  
Due to the sale of FSPI assets and the closing and sale of Intelock, their 
cash requirements are minimal.  The staffing costs and overhead of the parent 
company have been substantially reduced.  Working capital for the Vista Group 
is derived primarily through dividends and cost reimbursements from ACPI for 
expenses advanced or paid on behalf of ACPI.

SIGNIFICANT SUBSEQUENT EVENTS

Litigation

    On March 14, 1997, a settlement was confirmed by the entry of a Final 
Judgment and Order of Dismissal with Prejudice.  The settlement provides, 
among other things, that the Company will issue shares of its common stock 
(and provide certain anti-dilution protection) to the plaintiffs and the 
Class in order to convey ownership of 40% of the Company's common stock.  In 
addition, the settlement provides that additional common shares will be 
issued to the Class to maintain its 40% ownership interest in the Company if 
the Company's outstanding convertible preferred stock is converted to common 
stock at less than $1.35 per common share for the Series C preferred or $1.19 
per common share for the Series A and D preferred, or, if the Company's 
management is issued more than 20% of the common stock of the Company 
pursuant to the grant of stock options.  The number of shares to be issued 
under the terms of this settlement is approximately 14,226,000  The Company's 
insurance carrier also contributed $300,000 to the settlement.  The 
settlement is in satisfaction of all claims of the Class.

    On May 6, 1997, the Company issued approximately 14,226,000 shares of its 
common stock to the attorneys on behalf of the class, thereby fulfilling the 
Company's obligation to convey the 40% ownership in the Company to the Class.

    The SEC notified the Company in April 1996 that it had commenced an 
informal investigation of the Company.  The status of the investigation was 
changed to a formal private investigation in January, 1997. The Company has 
responded to the SEC's request for information and will continue to cooperate 
with the SEC in this matter. Independently, the Company through

                                   19

<PAGE>

its Audit Committee has conducted an internal investigation of the facts and 
circumstances surrounding the investigation.  (See Item 1 -- "Business -- 
Current Developments".)

Effects on Liquidity

    Due to the combination of operating losses, significant 1996 cash 
investments in inventories and capital assets, significant legal and 
accounting expenses, the short-term and long-term liquidity positions of the 
Company  are being managed very closely.  Management is also considering 
means other than through operations by which financing can be obtained, which 
could include, among other things, sales or dispositions of assets.  No 
assurance can be given that these actions will be successful.

Business Sale

    On April 18, 1997, the Company sold all of its 94% interest in Intelock's 
common stock to a company managed by a minority (4.2%) shareholder of 
Intelock, who was an officer and director of Intelock, prior to the purchase 
of Intelock by the Company in 1995. Proceeds from the sale were $5,000 and a 
$95,000 promissory note.  In deciding to sell Intelock, the Company's 
management considered claims made by minority (6.3%) shareholders of 
Intelock, regarding alleged false representations made by former officers and 
directors of the Company during its purchase of Intelock and alleged 
mismanagement of Intelock's assets, by the same former officers and 
directors, following the purchase.  These minority shareholder claims have 
been withdrawn since the sale of Intelock by the Company.  This sale will not 
have a material impact on the Company's 1997 operating results since the net 
operating assets of Intelock were written off during the third quarter of the 
1996 fiscal year.

    On June 19, 1997, the Company sold all of the stock of Alabaster for 
$2,000,000. Payment consisted of $500,000 cash and a $1,500,000 note 
receivable, secured by a first mortgage on the land and buildings which 
comprise Alabaster's manufacturing, sales and administrative operations.  The 
Company will record an additional loss of approximately ($1,600,000) on the 
sale in 1997.  During the year ended December 28, 1996, the Company recorded 
losses of approximately ($3,600,000) related to Alabaster as a result of 
operating losses and asset write downs.  Alabaster represented approximately 
8% of the Company's consolidated sales for the year ended December 28, 1996.

Asset Sale Agreement

    On June 30, 1997, the Company entered into an agreement to sell certain 
assets of ACPI.  These assets comprise primarily ACPI's key, key-making 
machine, letters, numbers and signs manufacturing, certain real estate and 
related businesses.  The Company will retain Boss Manufacturing, Inc., Boss 
Balloon, Inc. and the ACPI Warren Pet Division.  The business assets being 
sold accounted for approximately $57,000,000 or 51% of the Company's 
consolidated sales for the year ended December 28, 1996.  The closing of the 
sale is not expected until August or September of 1997, pending regulatory 
approval. 

                                   20

<PAGE>

Employment Agreements

    On April 15, 1997, employment agreements with two officers of ACPI were 
replaced with severance agreements.  The severance agreements provide for 
minimum annual payments of $169,000 each through 1997.  The severance 
agreements also provide for additional aggregate payments of up to $400,000 
based upon the occurrence of certain events, as defined in the agreements.

Real Estate Purchase

    On January 3, 1997, ACPI, through one of its wholly-owned subsidiaries, 
purchased a manufacturing facility which had previously been leased by the 
subsidiary from a corporation controlled by certain former officers of ACPI 
for $1.2 million in cash and an assumption of a $842,000 mortgage note.
  
Stock Options

    On December 31, 1996, the Company granted options to purchase 7,810,000 
shares of common stock at an exercise price of $.03 per share to directors, 
employees and consultants.  The options were granted for prior and future 
services.  One half of the options are vested upon grant and the remaining 
half vest on December 31, 1997. A compensation expense of $105,000 related to 
these options was recognized during the year ended December 28, 1996.  During 
the second quarter of 1997, a total of 2,662,500 of these options were 
exercised.

Convertible Preferred Stock

    During the period from November 1996 through April 1997, the Company 
engaged in negotiations with certain holders of various classes of the 
Company's convertible preferred stock concerning a possible transaction in 
which the Company would have repurchased and retired the preferred stock and 
the holders of the preferred stock would have released the Company from all 
purported claims by such holders against the Company, including claims 
alleging fraudulent misrepresentation by the Company in the original issuance 
of the preferred stock.  However, the Company ultimately determined that such 
a use of its resources would not be in its best interest and determined not 
to accept the preferred shareholders' last offer.  Thereafter, in May and 
July 1997, in order to help the Company settle all claims by these preferred 
shareholders, four of the Company's five directors, a consultant to the 
Company and an unaffiliated third party (the "Individual Purchasers") agreed 
to purchase shares held by such preferred shareholders on the same terms as 
they, the preferred shareholders, had offered to the Company.  The aggregate 
number of shares of common stock issued to the Individual Purchasers upon the 
conversion of such shares of preferred stock and issued by the Company in 
consideration for the release of claims, was the same number of shares of the 
Company's common stock originally offered to, but rejected by, the original 
preferred shareholders.  As a result, the Individual Purchasers acquired an 
aggregate of 2,570 shares 

                                   21
<PAGE>

of the Company's Series C and D Convertible Preferred Stock for an aggregate 
cash consideration of approximately $1 million and the preferred shareholders 
granted to the Company the release described above.  The shares of Series C 
and D Convertible Preferred Stock acquired by the Individual Purchasers were 
converted into an aggregate of 2,947,712 shares of the Company's common 
stock.  In addition, the Company issued an aggregate of 5,794,803 shares of 
its common stock to the Individual Purchasers in consideration for obtaining 
the release described above. The Company also agreed to issue additional 
shares of its common stock to the Individual Purchasers and pay the same 
consideration in the event that other holders of the Company's preferred 
stock convert such preferred stock into the Company's common stock at a more 
favorable conversion rate or receive additional consideration on a more 
favorable basis than that provided to the Individual Purchasers. 

    Separately, the Company agreed to pay $175,000 and $2,500 in attorneys' 
fees to one of the original preferred shareholders as additional 
consideration for the release of the claims associated with their preferred 
shares.  The $175,000 will be paid on January 2, 1999 with the interest 
accruing on such amount at 8% per annum, payable quarterly.  The Company 
obtained from the Individual Purchasers a waiver of their rights to also 
receive additional consideration paid by the Company in the form of a Note as 
referenced above.  
                                                                               
Common Stock

    The total number of authorized shares of the Company's common stock was 
50,000,000 on August 15, 1997.  At that time, there were 43,510,964 shares of 
the Company's common stock issued and outstanding.  The following schedule 
projects the effect on outstanding common shares of an assumed exercise of 
outstanding common stock options:

              Common Stock Issued           43,852,305 (1)
              Less Treasury Shares            (341,341)
              Stock Options                  5,266,050
                                             -------------
                                            48,777,014 (2)

    (1)  Common stock issued includes approximately 8,890,000 shares relating 
         to the conversion of the Company's convertible preferred stock and 
         the release of claims of the owners of the Company's convertible 
         preferred stock.

    (2)  This  total does not include the effect of the exercise of outstanding
         common stock warrants which have  exercise prices ranging from $2.00 to
         $12.00 per common share with varying expiration dates up to October,
         1999.

Item 8.  Financial Statements and Supplemental Data.

    The following consolidated financial statements of the Company and its
Accountants' Opinion set forth in Part IV, Item 14, of this Report:

                                   22

<PAGE>

         (i)   Consolidated Statements of Operations, Cash Flows and 
               Shareholders' Equity for the year ended December 28, 1996 and 
               year ended December 30, 1995.

         (ii)  Consolidated Balance Sheet -- December 28, 1996 and December 30,
               1995.

         (iii) Notes to the Consolidated Financial Statements; and Unqualified
               Opinion of Independent Accountants dated March 4, 1997.

Item 9.   Changes in And Disagreements With Auditors on Accounting And 
Financial Disclosures.

    Not applicable.
 
                                   23
<PAGE>
                              PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    The information as to directors of the registrant is set forth below. The 
information as to the executive officers of the registrant is included in 
Part I hereof under the caption "Executive Officers of the Registrant." 
Directors are elected by the stockholders at each annual meeting and serve 
until the next annual meeting of stockholders, or until their successors are 
duly elected and qualified. At the present time, the Company's Board of 
Directors consists of five directors. The following table sets forth certain 
information concerning the members of the Board of Directors of the Company 
at December 28, 1996:
 
<TABLE>
<CAPTION>
NAME                                          AGE                            POSITION
----------------------------------------      ---      -----------------------------------------------------
<S>                                           <C>          <C>
 
G. Louis Graziadio, III(1)..............       47      Chief Executive Officer and Chairman of the Board
                                                       since June 1996.He is also the Chairman and CEO of
                                                       Ginarra Holdings, Inc., a holding company with
                                                       investments through various corporations, and a
                                                       director of Imperial Credit Industries, Inc.,
                                                       Imperial Bancorp, Imperial Trust, Imperial Financial
                                                       Group and Lynx Golf, Inc.
 
Perry A. Lerner.........................       54      Director since June 1996.Mr. Lerner is a Managing
                                                       Director of Crown Capital Group, Inc., a New
                                                       York-based investment company. A graduate of Harvard
                                                       Law School and Claremont McKenna College,Mr. Lerner
                                                       was a partner of the law firm O'Melveny & Meyers from
                                                       1984-1996 and is a member of the State Bar of New
                                                       York, State Bar of California and American Bar
                                                       Association.Mr. Lerner also serves on the Board of
                                                       Directors of Imperial Credit Industries, Inc. and
                                                       Imperial Financial Group.
 
Lee E. Mikles(1)........................       41      Director since June 1996. Mr. Mikles is Chairman of
                                                       Mikles/Miller Management, Inc.Prior to the formation
                                                       of that company, he headed Mikles/Miller Group, an
                                                       affiliate of Shearson Lehman Brothers after serving
                                                       as First Vice President of the Corporate Finance
                                                       Department at Bateman Eichler, Hill Richards Inc. and
                                                       as First Vice President with Drexel Burnham Lambert,
                                                       Inc. from 1981 through 1989.Mr. Mikles also serves on
                                                       the Board of Directors of Imperial Bancorp, Imperial
                                                       Bank, Imperial Ventures,Coastcast Corporation and
                                                       Imperial Financial Group.

Paul A. Novelly.........................       53      Director since June 1996.Mr. Novellycontrols Apex Oil
                                                       Company in St. Louis, MO with a refinery in Long
                                                       Beach, CA; International Dunraine, Ltd., a
                                                       publicly-held company; and AIC, Limited, which,
                                                       headquarteredin Bermuda, trades petroleum products
                                                       internationally through its office in Monaco.Mr.
                                                       Novelly is a substantial shareholder and director of
                                                       Intrawest Corp.He also serves on the Board of
                                                       Directors of Apex Oil Company, Inc. International
                                                       Dunraine, Ltd., Coastcast Corporation, Imperial Bank
                                                       and Imperial Financial Group.

</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>
NAME                                          AGE                            POSITION
----------------------------------------      ---      -----------------------------------------------------
<S>                                           <C>       <C>
 
Richard D. Squires......................       39      Director since June 1996.Mr. Squires serves as
                                                       President of RS Holdings, Inc., a Dallas, Texas based
                                                       real estate and high-yield investment company, and as
                                                       President of R3 Realty Corporation, formerlyPace
                                                       Membership Warehouse, Inc., a former subsidiary of
                                                       K-Mart Corporation.Mr. Squires has previously served
                                                       as Chief Financial Officer of Ft. Worth Holdings,
                                                       Inc. and Vice President of Finance at American Hotels
                                                       Corporation and Second Vice President of Finance at
                                                       Punta Gorda Isles, Inc. Mr. Squires has a B.S. in
                                                       Accounting from Pennsylvania State University, and a
                                                       Masters of Business Administration from Harvard
                                                       University.
</TABLE>
 
------------------------
(1) Mr. Graziadio and Mr. Mikles are first cousins; otherwise, there are no
    family relationships existing between the officers and directors of the
    Company.
 
ITEM 11. EXECUTIVE COMPENSATION.
 
COMPENSATION TABLES
 
    The compensation paid in fiscal 1996 to the Company's Chief Executive
Officer and to each of the other executive officers and of the subsidiaries
whose total compensation exceeded $100,000 are as follows:


<TABLE>
<CAPTION>

                        1996 SUMMARY COMPENSATION TABLE
                                 THE REGISTRANT
                                                                                      LONG-TERM COMPENSATION
                                                                                      ----------------------
                                            ANNUAL                 OTHER                 AWARDS            PAYOUTS    ALL
                                         COMPENSATION              ANNUAL                ------            -------   OTHER
                                         ------------             COMPEN-      RESTRICTED     OPTIONS       LTIP     COMPEN-
NAME AND                              SALARY      BONUSES          SATION        STOCK         SARS        PAYOUT    SATION
PRINCIPAL POSITION       YEAR          ($)          ($)             ($)          AWARDS         (#)          ($)       ($)
--------------------  -----------  ------------  -----------      ----------   -----------  -------------  --------  --------
<S>                   <C>          <C>           <C>              <C>          <C>          <C>            <C>       <C>
 
G. Louis                  1996         -0-           -0-             -0-                                               $138,000
Graziadio, III(1)
CEO and
Chairman of the
Board

Richard P. Smyth,(2)      1996        43,750          -0-        2,019,000(4)
CEO and                   1995       134,100          -0-           -0-                       400,000
Chairman of the           1994       138,333          -0-           -0-
Board 






</TABLE>
 
                                   25
<PAGE>



<TABLE>
<CAPTION>
                                                          THE SUBSIDIARIES
                                                                                              LONG-TERM COMPENSATION
                                                                                        ---------------------------------
                                                                ANNUAL        OTHER              AWARDS          PAYOUTS    ALL
                        NAME                                 COMPENSATION     ANNUAL    ----------------------  ---------  OTHER
                        AND                               -----------------   COMPEN-    RESTRICTED   OPTIONS     LTIP     COMPEN-
                     PRINCIPAL                            SALARY    BONUS     SATION       STOCK       SARS      PAYOUT    SATION
                      POSITION                   YEAR      ($)       ($)        ($)        AWARDS      (#)        ($)        ($)
---------------------------------------------  --------  --------  --------  --------   -----------   -------    -------  --------
<S>                                            <C>       <C>       <C>       <C>           <C>         <C>      <C>       <C>

Stephan Cole,(3)                                 1996     280,000    -0-      372,000                   --
 CEO, ACPI Sub-sidiary (b) and (c)               1995     277,000    -0-        -0-                   100,000
                                                                                                                            
Richard Bern,                                    1996     275,000    -0-      372,000                   --
President ACPI Subsidiary (a) and (b)            1995     262,150    -0-        -0-                   100,000
                                                                                                                            
Daniel Norris,                                   1996     140,000    -0-        -0-                     --
President Alabaster Subsidiary (a) and (b)       1995     140,000    -0-        -0-                    40,000
</TABLE>
 
------------------------
(1) On June 6, 1996, Mr. Graziadio was elected Chief Executive Officer by the
    Board of Directors. Compensation for his services is as periodically
    determined by the Board's Compensation Committee, based on the type and
    extent of services Mr. Graziadio provided.
 
(2) On April 16, 1996, Mr. Smyth resigned as Chief Executive Officer and
    Chairman of the Board.
 
(3) Amended Base Salary of $150,000 pursuant to Employment Contracts commencing
    September 1, 1995. Bonus compensation during the term of the Employment
    Agreement together with amended salaries will equal 1995 Compensation.
 
(4) Represents compensation calculated on exercise of 200,000 stock options in
    February 1996. The shares issued were subsequently forfeited under the terms
    of the class action settlement in March 1997.
 
(a) The Company may also pay the Executive discretionary annual bonus
    compensation following any fiscal year in an amount determined by the Board
    of Directors of the Company or Compensation Committee, if such Committee is
    operating, in its sole discretion to be proper and appropriate based upon
    such factors as the Board of Directors or Compensation Committee, as the
    case may be, deems appropriate, including (I) the Executive's contributions
    to the success of the business operations and the pre-tax profits of the
    Company, as determined in accordance with generally accepted accounting
    principles, (ii) the revenues of the Company for its fiscal year, and (iii)
    the general overall performance of the Company for its fiscal year.
 
(b) The Executive may receive additional compensation ("Additional
    Compensation") by participating in an annual bonus pool for executives of
    the Company in an amount equal to ten percent (10%) of pre-tax profits of
    the Company for each fiscal year during the term of the agreement. The
    Executive's percentage shall be determined by the Board of Directors or the
    Compensation Committee, if there is one.

(c) The Company may also provide to the Executive a bonus ("Bonus 
    Compensation") in an amount to be determined by the Board of Directors of 
    the Company, or its Compensation Committee, if one exists.

                                      26
<PAGE>

    There were no options granted to the Executive Officers of the Company 
and its subsidiaries during the fiscal year ending December 28, 1996. The 
Company has no stock appreciation rights ("SARs") outstanding.

    The following sets forth the value of options exercised during the year 
and unexercised options held by the named executive officers on December 28, 
1996:
 
   Aggregated Options/SAR Exercises in the last Fiscal Year and Fiscal Year-End
                                Option/SAR Values
 
<TABLE>
<CAPTION>
                                                                     NUMBER OF      
                                                                    SECURITIES       
                                                                    UNDERLYING       VALUE OF UNEXERCISED    
                                                                    UNEXERCISED          IN-THE-MONEY        
                                                                  OPTIONS/ SARS AT   OPTIONS/SARS AT FISCAL  
                                                                 FISCAL YEAR END (#)     YEAR-END($)(5)      
                                        SHARES       VALUE      --------------------  ----------------------
                                     ACQUIRED ON    REALIZED         EXERCISABLE/          EXERCISABLE/
NAME                                   EXERCISE       ($)           UNEXERCISABLE         UNEXERCISABLE
-----------------------------------  -----------  ------------  --------------------  ----------------------
<S>                                  <C>          <C>           <C>                   <C>
                                                                                       
G. Louis Graziadio III.............     --             --              0 / 0                   0 / 0
                                                                                       
Richard P. Smyth(1)................    200,000    $  2,019,000         0 / 0                   0 / 0
</TABLE>
 
------------------------
(1) The indicated value is based on an exercise price of $1.28 per share and
    market value per share of $11.375 on the date of exercise for 200,000
    shares.

                                      27

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The following table sets forth, as of August 15, 1997, certain information
regarding the bene-ficial ownership of Common Stock by (i) each person known by
the Company to be beneficial owner of more than five percent of the outstanding
shares of Common Stock, (ii) each director; (iii) each Named Executive Officer
(as defined below); and (iv) all directors and executive officers as a group.
This table includes 14,226,111 shares issued in the Class Action Settlement
(referred to in Item 3), 1,242,500 currently exercisable options granted to
directors, employees and consultants of the Company on December 31, 1996, and
approximately 8,890,000 shares issued relating to the conversion of preferred
stock and claims release (referred to in Item 7.)
 
<TABLE>
<CAPTION>
                                                                                          COMMON STOCK BENEFICIALLY
                                                                                                    OWNED
                                                                                         ---------------------------
                                                                                            NO. OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1)                                                    SHARES      % OF CLASS
---------------------------------------------------------------------------------------  ------------  -------------
<S>                                                                                      <C>           <C>
 
Mr. G. Louis Graziadio, III (2)(4)(5)(7)...............................................     3,202,420        7.2%
2325 Palos Verdes Drive West, Suite 211
Palos Verdes Estates, CA 90274
 
Mr. Perry A. Lerner (3)................................................................     262,500          0.6%
660 Madison Ave., New York, NY 10022      
 
Mr. Lee E. Mikles (3)(4)(5)............................................................     1,719,620        3.8%
Mikles/Miller Management, Inc.
100 Wilshire Blvd., Santa Monica, CA 90401    
 
Mr. Paul A. Novelly (3)(4)(5)..........................................................     1,919,620        4.3%
8182 Maryland Ave., St. Louis, MO 63105    
 
Mr. Richard D. Squires (3)(4)(5).......................................................     1,719,620        3.8%
4229 Cochran Chapel, Dallas, TX 75209    
 
All Directors and Executive Officers as a
Group(5 Persons).......................................................................     8,823,780       19.7%
 
Ellison C. Morgan......................................................................     2,835,488        6.3%
One Embarcadero Center, Suite 2830
San Francisco, CA 94111    
 
Class Action Shareholders (6)..........................................................    14,426,111       32.2%
c/o Carr, Tabb & Pope, 1355 Peachtree St., NE
Suite 2000, Atlanta, GA 30309  
 
Shyam H. Gidumal (2)(4)(5).............................................................     2,657,120       5.9%
660 Madison Ave., New York, NY10022    
</TABLE>
 
                                      28
<PAGE>



 (1)     Unless otherwise noted, the Company believes that all persons 
         named in the table have sole voting and investment power with 
         respect to all shares of common stock beneficially owned by them.  
         Under the rules of the Securities and Exchange Commission, a person 
         is deemed to be a "beneficial" owner of securities if he or she has 
         or shares the power to vote or direct the voting of such securities 
         or the power to direct the disposition of such securities.  A person 
         is deemed to be the beneficial owner of any securities of which that 
         person has the right to acquire beneficial ownership within 60 days. 
          More than one person may be deemed to be a beneficial owner of the 
         same securities.

 (2)     Includes options previously exercised to acquire 1,200,000 
         shares of Common Stock.  Does not include options for 1,200,000 
         shares which are not exercisable within 60 days of the date of this 
         Form 10-K.

 (3)     Includes presently exercisable options to acquire 262,500 shares 
         of Common Stock, except for Mr. Squires who has previously exercised 
         and acquired his 262,500 shares of common stock.  Does not include 
         options for 262,500 shares which are not exercisable within 60 days 
         of the date of this Form 10-K.

 (4)     Includes 316,215 shares issued to each of four directors as a 
         result of their conversion of preferred stock and 641,868 shares 
         issued to each of four directors for obtaining releases of claims 
         against the Company in connection with their purchase of certain 
         shares of the Company's convertible preferred stock referred to in 
         Item 7.

 (5)     Includes 175,070 shares issued to each of four directors as a 
         result of their conversion of preferred stock and 323,967 shares 
         issued to each of four directors for obtaining releases of claims 
         against the Company in connection with their purchase of certain 
         shares of the Company's convertible preferred stock referred to in 
         Item 7.

 (6)     Shares have been issued in trust for subsequent issuance to 
         members of the Class.  To receive their shares, a Class member must 
         submit their claim to the trustee prior to May 29, 1997 and the 
         claim must be validated.  While held in trust, these shares cannot 
         be voted.  Distribution of shares is not expected to occur until 
         1998.

 (7)     Mr. Graziadio disclaims the beneficial ownership of 
         approximately 978,000 of these shares which are owned by Ginarra 
         Holdings, Inc. and an additional 499,000 shares which are owned by 
         the Graziadio Family Trust.

Item 13.  Certain Relationships and Related Transactions.

    On April 16, 1996, the Company entered into an agreement with Richard P. 
Smyth ("Smyth") setting forth the terms and conditions concerning Smyth's 
resignation as Chairman of the Board of Directors and Chief Executive Officer 
of the Company, the repayment of certain funds previously advanced to Smyth 
by the Company, security for the repayment of the advances and exercise of 
outstanding options.  Smyth had previously received options to purchase 
200,000 shares of the Company's stock at the purchase price of $5 per share.  
Smyth had 90 days from April 16, 1996 to exercise such options.  The 
underlying shares are also pledged as collateral for the repayment of Smyth's 
indebtedness to the Company.  On May 21, 1996, Smyth was advised by the 
Company that it did not intend to indemnify him against matters currently 
pending against him as required by the Bylaws of the Company.  No releases 
have been executed between the Company and Mr. Smyth.  (See Item 3 - Legal 
Proceedings.)  On July 17, 1996, the Company filed a complaint against Mr. 
Smyth in the Superior Court of Cobb County, State of Georgia, seeking damages 
in the approximate 

                                     -29-

<PAGE>

amount of $1 Million. Also, on that date, the exercise period for the 200,000 
options expired and the options were cancelled.

    In July 1996, the Board of Directors contracted with a turnaround 
management company, S. Gidumal & Company, Inc., and its affiliate, Strategic 
Turnarounds & Investment Corp. (collectively "STIC"), to assist with the 
restructuring of the Company, including operations, financing, litigation, 
strategic planning and divestitures.  Mr. Shyam Gidumal is a principal with 
STIC and in September 1996 became a member of the Board of Directors of ACPI 
and other subsidiaries of ACPI. STIC was involved in the resolution of the 
Class Action Litigation, sale of the assets of FSPI and financings involving 
ACPI and Alabaster.  During 1996, STIC was paid approximately $308,000 for 
its services.  In addition, in December 1996, Mr. Gidumal was granted options 
to acquire 2,400,000 shares of common stock of the Company at an exercise 
price of $.03 per share.  Of the options granted, 1,200,000 were immediately 
exercisable, with the balance exercisable on December 31, 1997. STIC's 
services continue to be engaged in 1997 and are compensated on a basis that 
has been developed by the Company's Board of Directors, which includes a 
fixed monthly component for services and success components based on the 
achievement of certain critical objectives to the Company.

    The Company has received a claim for indemnification from Arnold E. 
Johns, a member of the Board of Directors and President of the Company, 
pursuant to claims made against Mr. Johns by one or more shareholders, 
pursuant to the purported class action lawsuits filed against the Company and 
Mr. Johns, individually.  This claim was settled and a release obtained for 
Mr. Johns as part of the Class Action settlement in March 1997.

    During May 1997, four of the Company's directors, together with Mr. 
Gidumal, and an unaffiliated third party (the "Individual Purchasers") 
purchased approximately 57% of the Company's outstanding Convertible 
Preferred Stock directly from the security holders to settle potential and 
substantial legal and fraud claims against the Company, which occurred prior 
to the date the Company's current management and Board of Directors assumed 
control of the Company.  During July 1997, the Individual Purchasers 
purchased an additional 1,250 preferred shares, or, approximately 30% of the 
Company's outstanding Convertible Preferred Stock directly from the security 
holder (See Item 7 - Significant Subsequent Events - Convertible Preferred 
Stock.)

                                     -30-

<PAGE>

                                       
                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules And Reports on Form 8-K.

  (a)  List of financial statements, financial statement schedules and exhibits:

       (i)  List of financial statements.

       The following consolidated financial statements of Vista 2000, Inc. and
Report of Independent Accountants are attached to this report as follows:

       Consolidated Statements of Operations, Cash Flows and Shareholders' 
       Equity - year ended December 28, 1996 and year ended December 30, 1995;

       Consolidated Balance Sheet - December 28, 1996 and December 30, 1995;

       Notes to the Consolidated Financial Statements; and

       Report of Independent Accountants dated March 4, 1997.

       (ii) list of financial statement schedules

       The following financial statement schedules of Vista 2000, Inc. for the
       years ended December 28, 1996, December 30, 1995, September 30, 1994 and
       the three-month period ended December 31, 1994 are included pursuant to
       Item 8:

                        Report of Independent Certified Public
                            Accountants on Schedules . . . . . . . . . .  S-1

         Schedule II    Valuation and Qualifying Accounts  . . . . . . .  S-2

         Schedules not listed above have been omitted because they are not
         applicable or are not required for the information required to set 
         forth therein is included in the Financial Statements or notes 
         thereto.

         The following consolidated financial statements schedules of Vista 
         2000, Inc. are included in this report:

         Unqualified Opinion of Independent Accountants and Financial Statements
         Schedule

                                     -31-

<PAGE>


  (b)  Reports on Form 8-K:

       A report on Form 8-K containing the consolidated financial statements for
       the year ended December 30, 1995 was filed by the registrant on June 6,
       1996.

  (c)  Exhibits: 

       The exhibits required by Item 601 of Regulation SKB are filed herewith.
       (See Index of Exhibits.)

  (d)  Financial Statement Schedules:

       The Financial Statement Schedules required by Regulation SX are filed
herewith.

                                     -32-

<PAGE>

                                       
                                   SIGNATURES

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

(Registrant)      Vista 2000, Inc.

By (Signature and Title)               /s/ G. Louis Graziadio,III
                        ------------------------------------------------------
                  G. Louis Graziadio, III, Chief Executive Officer and President

Date: August 22, 1997


    Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.

By (Signature and Title)               /s/ G. Louis Graziadio,III
                        ------------------------------------------------------
                              G. Louis Graziadio, III, Chairman of the Board

Date: August 22, 1997

By (Signature and Title)               /s/ Perry A. Lerner
                        ------------------------------------------------------
                                   Perry A. Lerner, Director

Date: August 22, 1997

By (Signature and Title)               /s/ Lee E. Mikles
                        ------------------------------------------------------
                                   Lee E. Mikles, Director

Date: August 22, 1997

By (Signature and Title)               /s/ Paul A. Novelly
                        ------------------------------------------------------
                                   Paul A. Novelly, Director
Date: August 22, 1997

By (Signature and Title)               /s/ Richard D. Squires
                        ------------------------------------------------------
                                   Richard D. Squires, Director

Date: August 22, 1997


                                     -33-

<PAGE>


INDEX TO EXHIBITS


(2)      Plan of Acquisition, Reorganization, Arrangements, Liquidation or 
         Succession.
         Not applicable.

(3) (i)  Articles of Incorporation

3.1(a)   Certificate of Incorporation (Exhibit 3.1)

    (ii) By-Laws

3.2(a)   By-Laws (Exhibit 3.2)

(4) Instruments defining rights of security holders, including indentures

4.1(c)   Specimen of Common Stock Certificate (Exhibit 4.1)

4.2(a)   Form of Warrant Agreement covering Series A Warrants (Exhibit 4.2)

4.3(c)   Specimen of Series A Warrant (Exhibit 4.3)

4.4(b)   Form of Preferred Stock Certificate covering Series A Preferred Stock
         (Exhibit 4.1)

4.5(b)   Form of Preferred Stock Certificate covering Series B Preferred Stock
         (Exhibit 4.2)

4.6(b)   Form of Preferred Stock Subscription Agreement covering Series B
         Preferred Stock (Exhibit 4.3)

4.7(b)   Form of Preferred Stock Certificate covering Series C Preferred Stock
         (Exhibit 4.4)

4.8(b)   Form of Preferred Stock Certificate covering Series D Preferred Stock
         (Exhibit 4.5)

4.9(b)   Form of Preferred Stock Subscription Agreement covering Series D
         Preferred Stock (Exhibit 4.6)

(9)  Voting Trust Agreement
         Not applicable.

(10) Material Contracts

10.1(a)  Lease Agreement, dated January 5, 1993 between Roswell Business
         Centers Associates, LP and the Company as amended.  (Exhibit 10.1)



<PAGE>



10.2(a)  Patent Rights Purchase Agreement, dated October 1, 1993 between Blue
         Ridge Ventures, Inc. and the Company.  (Exhibit 10.2) 

10.3(a)  1993 Incentive Stock Option Plan (Exhibit 10.4)

10.4(b)  1993 Non-Employee Director Stock Option Plan, as amended.  (Exhibit
         10.2)

10.5(a)  Form of Series 1992B 15% Subordinated Debenture, as amended.  (Exhibit
         10.8)

10.6(a)  Form of 1992B Warrant to Purchase Common Stock.  (Exhibit 10.9)

10.7(a)  Form of Series 1993A 15% Subordinated Convertible Debenture.  (Exhibit
         10.10)

10.8(a)  Form of 1993A Warrant to Purchase Common Stock.  (Exhibit 10.11)

10.9(d)  Form of Employment Agreement to be entered into between the Company
         and Robert M. Fuller, Richard P. Smyth and Norman W. Wicks,
         respectively.  (Exhibit 10.12)

10.10(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between 
         Robert M. Fuller and the Company.  (Exhibit 10.27)

10.11(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between 
         Richard P. Smyth and the Company.  (Exhibit 10.28)

10.12(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between 
         Norman W. Wicks and the Company.  (Exhibit 10.29)

10.13(b) Prospectus for the Company's 1993 Incentive Stock Option Plan and 1993
         Non-Employee Director Stock Option Plan.  (Exhibit 10.1)

10.14(b) First Amendment to the Company's 1993 Incentive Stock Option Plan. 
         (Exhibit 10.1)

10.15(b) Employment Agreement between the Company and Arnold E. Johns, Jr. 
         (Exhibit 10.4)

10.16(b) Employment Agreement between the Company's subsidiary, American 
         Consumer Products, Inc., and Richard Bern.  (Exhibit 10.5)

10.17(b) Employment Agreement between the Company's subsidiary, Alabaster
         Industries, Inc., and Daniel A. Norris.  (Exhibit 10.6)

10.18(b) Employment Agreement between the Company's subsidiary, American 
         Consumer Products, Inc., and Stephen W. Cole.  (Exhibit 10.7)

10.19(e) Employment Agreement between the Company and Robert E. Altenbach 
         (Exhibit 10.19)



<PAGE>



10.20(f) Asset Purchase Agreement between Vista 2000, Inc., Family Safety 
         Products, Inc. and Therm Acquisition, Inc. dated August 23, 1996  
         (Exhibit 10.20)

10.21(f) Loan and Security Agreement between Alabaster Industries, Inc. and
         Century Business Credit Corporation dated September 20, 1996 
         (Exhibit 10.21)

(11)     Statement re Computation of Per Share Earnings

11.1     Statement re computation of per share earnings is included herein as
         Exhibit 11.1 of this Report.

(12)     Statements re Computation of Ratios
         Not applicable.

(13)     Annual Report to Security Holders, Form 10-Q or Quarterly Report to 
         Security Holders
         Not applicable.

(16)     Letter re Change in Certifying Accountant
         Not applicable.

(18)     Letter re Change in Accounting Principles
         Not applicable.

(21)     Subsidiaries of the Registrant

21.1        Subsidiaries of the Registrant are listed on Exhibit 21.1 included 
            in this Report.

(22)     Published Report Regarding Matters Submitted to a Vote of Security 
         Holders

22.1(b)     Proxy Statement for Special Meeting of Stockholders to be held
            December 18, 1995.  (Exhibit 20.1)

(23)     Consents of Experts and Counsel
         Not applicable.

(24)     Power of Attorney
         Not applicable.

(27)     Financial Data Schedule  (Filed only by Electronic Filers)

27.1          Financial Data Schedule

(28)     Information from Reports Furnished to State Insurance Regulatory 
         Authorities
         Not applicable.

                                     -37-

<PAGE>



(99)     Additional Exhibits
         None.

------------------------
(a) Exhibit previously filed as part of and is incorporated herein by 
    reference to the Company's Registration Statement on Form SB-2 
    (Registration No. 33-73118-A). The exhibit number contained in 
    parenthesis refers to the exhibit number in such Registration Statement.

(b) Exhibit previously filed as part of and is incorporated herein by 
    reference to the Company's Current Report on Form 8-K dated June 9, 1996. 
    The exhibit number contained in parenthesis refers to the Exhibit number 
    in such Form 8-K.

(c) Exhibit previously filed as part of and is incorporated by reference 
    to Amendment No. 2 to the Company's Registration Statement on Form SC-2 
    (Registration No. 33-73118-A).  The exhibit number contained in 
    parenthesis refers to the exhibit numbers in such Registration Statement.

(d) Exhibit previously filed as part of and is incorporated by reference 
    to Amendment No. 1 to the Company's Registration Statement on Form SC-2 
    (Registration No. 33-73118-A).  The exhibit number contained in 
    parenthesis refers to the exhibit numbers in such Registration Statement.

(e) Exhibit previously filed as part of and is incorporated herein by 
    reference to the Company's Current Report on Form 10-Q for the quarter 
    ended March 30, 1996. The exhibit number contained in parenthesis refers 
    to the Exhibit number in such Form 10-Q.

(f) Exhibit previously filed as part of and is incorporated herein by 
    reference to the Company's Current Report on Form 10-Q for the quarter 
    ended September 28, 1996.  The exhibit number contained in parenthesis 
    refers to the Exhibit number in such Form 10-Q.

                                     -38-

<PAGE>


   FINANCIAL STATEMENTS AND REPORT OF 
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
   VISTA 2000, INC. AND SUBSIDIARIES 
December 28, 1996 and December 30, 1995
 


<PAGE>

                                       
                REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors 
Vista 2000, Inc.
 
We have audited the accompanying consolidated balance sheets of Vista 2000,
Inc. and subsidiaries as of December 28, 1996 and December 30, 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The financial
statements of Vista 2000, Inc. for the three month period ended December 31,
1994 and for the year ended September 30, 1994, were audited by other auditors
whose report dated May 17, 1996, expressed an unqualified opinion on those
statements.
 
We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit 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 1996 and 1995 financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Vista 2000, Inc. and subsidiaries as of December 28, 1996 and December 30, 1995,
and the consolidated results of their operations and their consolidated cash
flows for the years then ended in conformity with generally accepted accounting
principles.




ATLANTA, GEORGIA
March 4, 1997, except for the second paragraph 
  of Note 4, as to which the date is April 4, 1997 
  and the fifth paragraph of Note 5 as to which 
  the date is April 14, 1997.





<PAGE>
                                       
                       Vista 2000, Inc. and Subsidiaries
 
                          CONSOLIDATED BALANCE SHEETS 
              (Dollar amounts in thousands except per share data)




                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                       DECEMBER 28,  DECEMBER 30,
                                                                                           1996          1995
                                                                                       ------------  ------------
<S>                                                                                    <C>           <C>
CURRENT ASSETS
  Cash and cash equivalents..........................................................   $    1,165    $      871
  Accounts receivable, net of allowance for 
    doubtful accounts and returns of $1,405 
    and $2,230, respectively.........................................................       16,187        15,910
  Inventories........................................................................       25,157        33,378
  Prepaid expenses...................................................................        1,564           217
  Other current assets...............................................................          205         1,174
                                                                                       ------------  ------------
        Total current assets.........................................................       44,278        51,550

PROPERTY AND EQUIPMENT, NET..........................................................       15,927        13,041


OTHER ASSETS.........................................................................        1,566           720
                                                                                       ------------  ------------












                                                                                        $   61,771    $   65,311
                                                                                       ------------  ------------
                                                                                       ------------  ------------

</TABLE>



<PAGE>

                                       
                     LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                       DECEMBER 28,  DECEMBER 30,
                                                                                           1996          1995
                                                                                       ------------  ------------
<S>                                                                                    <C>           <C>
CURRENT LIABILITIES
  Note payable.......................................................................   $      908    $       --
  Current portion of long-term debt..................................................          383           607
  Accounts payable...................................................................        5,209        12,542
  Accrued payroll and related expenses...............................................        3,596         4,053
  Accrued liabilities................................................................        3,595         3,955
                                                                                       ------------  ------------
        Total current liabilities....................................................       13,691        21,157

LONG-TERM LIABILITIES
  Long-term debt.....................................................................       23,512        23,029
  Other..............................................................................          407            --
                                                                                       ------------  ------------
        Total long-term liabilities..................................................       23,919        23,029

COMMITMENTS AND CONTINGENCIES........................................................           --            --

STOCKHOLDERS' EQUITY
  Preferred stock $1 par value, 500,000 shares 
    authorized, 4,220 and 18,418 shares issued 
    and outstanding, respectively....................................................        3,985         5,981
  Common stock, $.01 par value, 50,000,000 shares 
    authorized, 18,074,120 and 11,626,475 shares 
    issued and outstanding, respectively.............................................          181           116
  Additional paid-in capital.........................................................       62,108        36,201
  Accumulated deficit................................................................      (40,340)      (20,939)
  Cumulative translation adjustment..................................................          (23)          (19)
                                                                                       ------------  ------------
                                                                                            25,911        21,340
  Less:treasury shares--at cost 341,341 and 
    71,100 shares, respectively......................................................        1,750           215
                                                                                       ------------  ------------
        Total stockholders' equity (deficit).........................................       24,161        21,125
                                                                                       ------------  ------------
                                                                                        $   61,771    $   65,311
                                                                                       ------------  ------------
                                                                                       ------------  ------------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
 
<PAGE>

                                       
                        Vista 2000, Inc. and Subsidiaries
 
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Dollar amounts in thousands except per share data)
 
<TABLE>
<CAPTION>
                                                                                     THREE MONTH
                                                          YEAR ENDED    YEAR ENDED   PERIOD ENDED   YEAR ENDED
                                                         DECEMBER 28,  DECEMBER 30,  DECEMBER 31,  SEPTEMBER 30,
                                                             1996          1995          1994          1994
                                                         ------------  ------------  ------------  -------------
<S>                                                      <C>           <C>           <C>           <C>
Net sales..............................................   $  110,955    $   32,422    $        1    $       137

Cost of sales..........................................       82,563        28,244            26            314
                                                         ------------  ------------  ------------  -------------

Gross profit (loss)....................................       28,392         4,178           (25)          (177)

Operating expenses.....................................       34,235        17,318           858          1,721
                                                         ------------  ------------  ------------  -------------
                                                              (5,843)      (13,140)         (883)        (1,898)

Loss on sale of operating assets.......................       (8,311)       (1,147)           --             --
Writedown of operating assets..........................       (2,476)           --            --             --
                                                         ------------  ------------  ------------  -------------

Loss from operations...................................      (16,630)      (14,287)         (883)        (1,898)

Other income and (expense)
Interest expense.......................................       (2,174)         (649)         (143)          (266)
Other..................................................         (351)          273             4             45
                                                         ------------  ------------  ------------  -------------

Net loss before income taxes...........................      (19,155)      (14,663)       (1,022)        (2,119)

Income tax expense.....................................         (246)           --            --             --
                                                         ------------  ------------  ------------  -------------
Net loss ..............................................     $(19,401)     $(14,663)      $(1,022)       $(2,119)
                                                         ------------  ------------  ------------  -------------
                                                         ------------  ------------  ------------  -------------

Net loss per common share..............................       $(1.20)       $(2.33)       $(0.36)         $(.99)
                                                         ------------  ------------  ------------  -------------
                                                         ------------  ------------  ------------  -------------

Weighted average shares outstanding....................   16,133,508     6,294,361     2,813,293      2,131,226
                                                         ------------  ------------  ------------  -------------
                                                         ------------  ------------  ------------  -------------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 

<PAGE>
                     Vista 2000, Inc. and Subsidiaries
 
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 
      Year ended December 28, 1996, year ended December 30, 1995, three month
        period ended December 31, 1994 and year ended September 30, 1994
                    (Dollars and share amounts in thousands)
 

<TABLE>
<CAPTION>
                                                                 PREFERRED STOCK
                                     ------------------------------------------------------------------------
                                         SERIES A           SERIES B           SERIES C          SERIES D
                                     ----------------   ----------------   ----------------  ----------------
                                     SHARES   DOLLARS   SHARES   DOLLARS   SHARES   DOLLARS  SHARES   DOLLARS
                                     ------   -------   ------   -------   ------   -------  ------   -------
<S>                                  <C>      <C>       <C>      <C>       <C>      <C>      <C>      <C>
Balance at September 30, 1993......   --      $ --       --      $ --       --      $ --      --      $ --
Distribution to stockholders.......   --        --       --        --       --        --      --        --
Net loss...........................   --        --       --        --       --        --      --        --
                                      --        --       --        --       --        --      --        --
                                              -------            -------            -------           -------
Balance at September 30, 1994......   --        --       --        --       --        --      --        --
Proceeds, net of issuance costs of
  $1,339 from public offering of
  common stock.....................   --        --       --        --       --        --      --        --
Acquisitions of treasury stock and
  warrants.........................   --        --       --        --       --        --      --        --
Net loss...........................   --        --       --        --       --        --      --        --
                                       --                  -                  -                --
                                              -------            -------            -------           -------
Balance at December 31, 1994.......   --        --       --        --       --        --      --        --
Issuance of stock in
  acquisitions.....................   --        --       --        --       --        --      --        --
Issuance of preferred stock, net of
  issuance costs of $1,241.........    87      8,291       3      2,462       1     11,603      2      1,940
Preferred stock conversions........   (72)    (6,852)     (2)    (1,232)     (1)    (10,231)  --        --
Issuance of common shares, net of
  issuance costs of $290...........   --        --       --        --       --        --      --        --
Exercise of stock options, net of
  12 shares exchanged..............   --        --       --        --       --        --      --        --
Exercise of warrants...............   --        --       --        --       --        --      --        --
Common stock issued for services...   --        --       --        --       --        --      --        --
Acquisitions of treasury stock.....   --        --       --        --       --        --      --        --
Debt conversions...................   --        --       --        --       --        --      --        --
Issuance of warrants for
  services.........................   --        --       --        --       --        --      --        --
Compensatory stock options.........   --        --       --        --       --        --      --        --
Foreign currency translation
  adjustment.......................   --        --       --        --       --        --      --        --
Net loss...........................   --        --       --        --       --        --      --        --
                                       --                  -                  -                --
                                              -------            -------            -------           -------
Balance at December 30, 1995.......    15      1,439       1      1,230     --       1,372      2      1,940
 
<CAPTION>
 
                                      COMMON STOCK     ADDITIONAL                 CUMULATIVE     TREASURY STOCK         TOTAL
 
                                     ---------------    PAID-IN     ACCUMULATED   TRANSLATION   ----------------    STOCKHOLDERS'
 
                                     SHARES  DOLLARS    CAPITAL       DEFICIT     ADJUSTMENT    SHARES   DOLLARS   EQUITY (DEFICIT)
 
                                     ------  -------   ----------   -----------   -----------   ------   -------   ----------------
 
<S>                                  <C>     <C>       <C>          <C>           <C>           <C>      <C>       <C>
Balance at September 30, 1993......  2,131    $ 21      $ 2,055      $ (2,894)      $--          --       $--          $  (818)
Distribution to stockholders.......   --      --          --             (241)       --          --        --             (241)
Net loss...........................   --      --          --           (2,119)       --          --        --           (2,119) 
                                     ------  -------   ----------   -----------     ---         ------   -------       -------
Balance at September 30, 1994......  2,131      21        2,055        (5,254)       --          --        --           (3,178)
Proceeds, net of issuance costs of
  $1,339 from public offering of
  common stock.....................  1,150      12        4,975        --            --          --        --            4,987
Acquisitions of treasury stock and
  warrants.........................   --      --          --           --            --           (69)     (796)          (796)
Net loss...........................   --      --          --           (1,022)       --          --        --           (1,022)
                                     ------  -------   ----------   -----------     ---         ------   -------       -------
Balance at December 31, 1994.......  3,281      33        7,030        (6,276)       --           (69)     (796)            (9)
Issuance of stock in
  acquisitions.....................    550       5        1,096        --            --            69       796          1,897
Issuance of preferred stock, net of
  issuance costs of $1,241.........   --      --          --           --            --          --        --           24,296
Preferred stock conversions........  4,086      41       18,274                      --          --        --            --
Issuance of common shares, net of
  issuance costs of $290...........  2,533      25        6,762        --            --          --        --            6,787
Exercise of stock options, net of
  12 shares exchanged..............    196       2          214        --            --          --        --              216
Exercise of warrants...............    250       3          622        --            --          --        --              625
Common stock issued for services...    280       3          557        --            --                    --              560
Acquisitions of treasury stock.....   --      --          --           --            --           (71)     (215)          (215)
Debt conversions...................    450       4          716        --            --          --        --              720
Issuance of warrants for
  services.........................   --      --             40        --            --          --        --               40
Compensatory stock options.........   --      --            890        --            --          --        --              890
Foreign currency translation
  adjustment.......................   --      --          --           --           (19)         --        --              (19)
Net loss...........................   --      --          --          (14,663)       --          --        --          (14,663)
                                      ------  -------   ----------   -----------    ---        ------   -------       --------
Balance at December 30, 1995.......   11,626    116       36,201      (20,939)      (19)          (71)     (215)        21,125
 
 
</TABLE>
 
<PAGE>
<TABLE>
                                                                 PREFERRED STOCK
                                     ------------------------------------------------------------------------
                                         SERIES A           SERIES B           SERIES C          SERIES D
                                     ----------------   ----------------   ----------------  ----------------
                                     SHARES   DOLLARS   SHARES   DOLLARS   SHARES   DOLLARS  SHARES   DOLLARS
                                     ------   -------   ------   -------   ------   -------  ------   -------

<S>                                  <C>      <C>       <C>      <C>       <C>      <C>      <C>      <C>
Issuance of preferred stock, net of
  issuance costs of $600...........   --        --       --        --       --        --       20     19,400
Issuance of common stock...........   --        --       --        --       --        --      --        --
Preferred stock conversions........   (14)    (1,317)     (1)    (1,230)    --        (274 )  (19)    (18,575)
Treasury stock acquired for cash...   --        --       --        --       --        --      --        --
Exercise of stock options..........   --        --       --        --       --        --      --        --
Exercise of warrants...............   --        --       --        --       --        --      --        --
Compensatory stock options and
  treasury shares acquired via
  stock rescissions................   --        --       --        --       --        --      --        --
Foreign currency translation
  adjustment.......................   --        --       --        --       --        --      --        --
Net loss...........................   --        --       --        --       --        --      --        --
                                     ---      ------    ---      ------    ---      -------  ----     -------
Balance at December 28, 1996.......     1     $  122     --      $ --       --      $1,098      3     $2,765
                                     ---      ------    ---      ------    ---      -------  ----     -------
                                     ---      ------    ---      ------    ---      -------  ----     -------

<CAPTION>
 
                                      COMMON STOCK     ADDITIONAL                 CUMULATIVE     TREASURY STOCK         TOTAL
 
                                     ---------------    PAID-IN     ACCUMULATED   TRANSLATION   ----------------    STOCKHOLDERS'
 
                                     SHARES  DOLLARS    CAPITAL       DEFICIT     ADJUSTMENT    SHARES   DOLLARS   EQUITY (DEFICIT)
 
                                     ------  -------   ----------   -----------   -----------   ------   -------   ----------------
 
<S>                                  <C>     <C>       <C>          <C>           <C>           <C>      <C>       <C>
Issuance of preferred stock, net of
  issuance costs of $600...........   --      --          --           --           --           --        --           19,400
Issuance of common stock...........    300       3        1,797        --           --           --        --            1,800
 
Preferred stock conversions........  5,491      55       21,341        --           --           --        --          --
 
Treasury stock acquired for cash...   --      --          --           --           --            (50)     (602)          (602)
 
Exercise of stock options..........    637       7          988        --           --           --        --              995
 
Exercise of warrants...............     20    --             40        --           --           --        --               40
 
Compensatory stock options and
  treasury shares acquired via
  stock rescissions................   --      --          1,741        --           --           (220)     (933)           808
 
Foreign currency translation
  adjustment.......................   --      --          --           --              (4)       --        --               (4)
 
Net loss...........................   --      --          --          (19,401)      --           --        --          (19,401)
 
                                     ------  -------   ----------   -----------       ---       ------   -------       -------
 
Balance at December 28, 1996.......  18,074   $181      $62,108      $(40,340)       $(23)       (341)   ($1,750)      $24,161
 
                                     ------  -------   ----------   -----------       ---       ------   -------       -------
                                     ------  -------   ----------   -----------       ---       ------   -------       -------
</TABLE>
 





<PAGE>
                          VISTA 2000, INC. AND SUBSIDIARIES
 
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                   (Dollar amounts in thousands except per share data)
 
<TABLE>
<CAPTION>
                                                                                      THREE MONTH
                                                          YEAR ENDED    YEAR ENDED   PERIOD ENDED    YEAR ENDED
                                                         DECEMBER 28,  DECEMBER 30,  DECEMBER 31,   SEPTEMBER 30,
                                                             1996          1995          1994           1994
                                                         ------------  ------------  -------------  -------------
<S>                                                      <C>           <C>           <C>            <C>
Cash flows used by operating activities:
 Net loss..............................................  $   (19,401)  $   (14,663)  $    (1,022)    $(2,119)
 Adjustments to reconcile net loss to net cash used by
  operations:
  Loss on sale of operating assets.....................        8,311        --            --             --
  Writedown of operating assets........................        2,476        --            --             --
  Depreciation.........................................        2,108           611             9             41
  Loss on disposal of property and equipment...........          400            84        --             --
  Stock based compensation expense.....................          808         1,490        --             --
  (Increase) decrease in operating assets, net of
   businesses acquired:
   Accounts receivable.................................       (1,113)        2,722           (21)           157
   Inventories.........................................       (3,627)       (2,264)          (64)           232
   Prepaid expenses and other current assets...........         (385)          342           (30)            31
   Other assets........................................       (1,143)         (224)          435           (185)
  Increase (decrease) in operating liabilities, net of
   businesses acquired:
  Accounts payable.....................................       (4,222)        3,662          (875)          (146)
  Accrued liabilities..................................         (585)        1,996          (658)           837
                                                         ------------  ------------       ------         ------
    Net cash used by operating activities..............      (16,373)       (6,244)       (2,226)        (1,152)
                                                         ------------  ------------       ------         ------
Cash flows used by investing activities:
 Acquisitions, net of cash acquired American Consumer
  Products, Inc.......................................          --         (13,925)         --              --
 Alabaster Industries, Inc............................          --            (157)         --              --
 Intelock Technologies.................................         --             754          --              --
 Proceeds from sale of operating assets................        2,806          --            --              --
 Proceeds from sale of property and equipment..........           54          --            --              --
 Purchases of property and equipment...................       (5,931)       (2,365)          (53)            (8)
                                                         ------------  ------------       ------         ------
    Net cash used by investing activities..............       (3,071)      (15,693)          (53)            (8)
                                                         ------------  ------------       ------         ------

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                      THREE MONTH
                                                          YEAR ENDED    YEAR ENDED   PERIOD ENDED    YEAR ENDED
                                                         DECEMBER 28,  DECEMBER 30,  DECEMBER 31,   SEPTEMBER 30,
                                                             1996          1995          1994           1994
                                                         ------------  ------------  -------------  -------------
<S>                                                      <C>           <C>           <C>            <C>

Cash flows provided by financing activities:
Net proceeds (payment) from short-term borrowings......          908        --            (1,128)           851
Net repayments on long-term revolving line of credit...       (2,200)       --            --             --
Proceeds from long-term debt...........................       --            --            --                 24
Repayment of long-term debt............................         (599)       (9,331)         (340)        --
Proceeds from issuance of common stock, net of issue
  costs................................................        1,800         6,787         4,987         --
Proceeds from issuance of preferred stock, net of issue
  costs................................................       19,400        24,296        --             --

</TABLE>
 

<PAGE>
<TABLE>
<CAPTION>
                                                                                      THREE MONTH
                                                          YEAR ENDED    YEAR ENDED   PERIOD ENDED    YEAR ENDED
                                                         DECEMBER 28,  DECEMBER 30,  DECEMBER 31,   SEPTEMBER 30,
                                                             1996          1995          1994           1994
                                                         ------------  ------------  -------------  -------------
<S>                                                      <C>           <C>           <C>            <C>
Proceeds from exercise of stock options and warrants...        1,035           841        --             --
Purchase of treasury stock and warrants................         (602)         (215)         (796)        --
                                                         ------------  ------------       ------         ------
    Net cash provided by financing activities..........       19,742        22,378         2,723            875
                                                         ------------  ------------       ------         ------
Effect of exchange rate changes on cash................           (4)          (19)       --             --
                                                         ------------  ------------       ------         ------
Net increase (decrease) in cash during period..........          294           422           444           (285)
Cash and cash equivalents at the beginning of the
  period...............................................          871           449             5            290
                                                         ------------  ------------       ------         ------
Cash and cash equivalents at the end of the period.....   $    1,165    $      871     $     449      $       5
                                                         ------------  ------------       ------         ------
                                                         ------------  ------------       ------         ------
Supplemental disclosure:
 Interest paid.........................................   $    2,750    $      754     $     392      $      16
 Income taxes paid.....................................          287        --            --             --

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                                                                      THREE MONTH
                                                          YEAR ENDED    YEAR ENDED   PERIOD ENDED    YEAR ENDED
                                                         DECEMBER 28,  DECEMBER 30,  DECEMBER 31,   SEPTEMBER 30,
                                                             1996          1995          1994           1994
                                                         ------------  ------------  -------------  -------------
<S>                                                      <C>           <C>           <C>            <C>
Noncash investing and financing activities:
Acquisition of treasury stock via
stock rescissions......................................   $      933    $   --         $  --          $  --
Assets purchased under long-term
obligations............................................   $    3,227    $      170     $  --          $  --
Assets sold for assumption of
related obligation.....................................   $      169    $   --         $  --          $  --
Capital lease obligations incurred.....................   $   --        $      228     $  --          $  --
Conversion of debt to common stock.....................   $   --        $      720     $  --          $  --
Note payable issued for patent rights..................   $   --        $   --         $  --          $       9
Note payable issued in excess of cost--of patent
  rights...............................................   $   --        $   --         $  --          $     241
Acquisition of businesses
Fair value of assets acquired..........................   $   --        $   63,330     $  --          $  --
Cash paid..............................................       --           (14,689)       --             --
Common stock issued....................................       --            (1,897)       --             --
                                                         ------------  ------------       ------         ------
Liabilities assumed....................................   $   --        $   46,744     $  --          $  --
                                                         ------------  ------------       ------         ------
                                                         ------------  ------------       ------         ------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
            

<PAGE>

                   Vista 2000, Inc. and Subsidiaries

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  December 28, 1996 and December 30, 1995
             (Dollar amounts in thousands except per share data)



(1) Nature of Business and Summary of Significant Accounting Policies

Nature of Business

Vista 2000, Inc. and its subsidiaries, (the "Company"), are engaged primarily 
in the manufacture, distribution and sale of specialty consumer products 
including key blanks, letters and numbers, signs, fasteners, knives, 
builder's hardware, pet products, balloons, gloves, boots, rainwear and 
plastic housewares.  The Company's customers are primarily hardware, mass 
merchandisers, food and do-it-yourself retailers located throughout North 
America. 

Public Offerings

On October 24, 1994, the Company completed an initial public offering of its 
common stock.  The offering resulted in the sale of 1,000,000 units at $5.50 
per unit before underwriting discounts and other offering expenses.  Each 
unit consisted of one share of Company common stock and Series A Warrants to 
purchase two Company common shares. Each warrant entitled the holder to 
purchase, for a period of 48 months ending October 26, 1998, one share of 
common stock at an exercise price of $7.00 per share during the first 24 
months and $10.00 per share thereafter, subject to adjustment in certain 
circumstances.  In December, 1994, an additional 150,000 of the units, 
representing the underwriters' over-allotment option with respect to the 
offering, were sold.

During 1995 the Company completed four preferred stock offerings and one 
common stock offering pursuant to the exemption from registration under 
Regulation S of the Securities Act of 1933.  $24,296 and $6,787, net of 
issuance costs, were raised through the preferred stock offerings and the 
common stock offerings, respectively.

During 1996, the Company completed one preferred stock offering and one 
common stock offering pursuant to the exemption from registration under 
Regulation S of the Securities Act of 1993.  $19,400 and $1,800, net of 
issuance costs, were raised through the preferred stock offering and common 
stock offering, respectively.

<PAGE>

                          Vista 2000, Inc. and Subsidiaries
                                           
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                           
                       December 28, 1996 and December 30, 1995
                 (Dollar amounts in thousands except per share data)
                                           


(1) Nature of Business and Summary of Significant Accounting Policies - 
Continued

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of 
Vista 2000, Inc. ("Vista"), and its wholly-owned subsidiaries, American 
Consumer Products, Inc. and subsidiaries ("ACPI"), Alabaster Industries, Inc. 
("Alabaster"), Family Safety Products, Inc. ("FSPI"), and Intelock 
Technologies ("Intelock"), collectively ("the Company").  All significant 
intercompany balances and transactions have been eliminated in the 
consolidated financial statements.

Change in Fiscal Year

During 1995, the Company elected to change its fiscal year-end from September 
30 to a 52/53 week year ending on the last Saturday in the calendar year.  
Accordingly, the consolidated financial statements presented herein include 
the years ended December 28, 1996, December 30, 1995, the three month period 
ended December 31, 1994 and the year ended September 30, 1994.  Fiscal years 
1996 and 1995 each contained 52 weeks.

Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Company considers all highly 
liquid debt instruments purchased with a maturity of three months or less  to 
be cash equivalents. 

Revenue Recognition

The Company recognizes revenue and provides for the estimated cost of returns 
and allowances in the period the products are shipped.

Approximately 21% of the Company's revenue was from two customers in 1996, 
accounting for approximately 11% and 10%, respectively, of total revenue.  
Approximately 15% of revenue was from one customer in 1995.

<PAGE>

                                           
                          Vista 2000, Inc. and Subsidiaries
                                           
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                           
                       December 28, 1996 and December 30, 1995
                 (Dollar amounts in thousands except per share data)
                                           


(1) Nature of Business and Summary of Significant Accounting Policies - 
Continued

Inventories

Inventories are stated at the lower of average cost or market. Cost for 
approximately 83% and 80% of inventories at December 28, 1996 and December 
30, 1995, respectively, have been determined using the last-in, first-out 
(LIFO) method.  Cost for the remainder of the inventories has been determined 
primarily using the first-in, first-out (FIFO) method.

Had the Company used the first-in, first-out (FIFO) method of accounting, 
gross profit would have been substantially the same in 1996 and 1995.

Advertising Costs

The Company expenses the cost of advertising the first time advertising takes 
place. Costs of trade shows and developing advertising materials are expensed 
at the time of the trade shows or as the advertising materials are produced 
and distributed to customers.  At December 30, 1995, $159 of prepaid 
advertising was included in prepaid expenses.  There was no prepaid 
advertising at December 28, 1996.  Advertising expense for the year ended 
December 28, 1996, year ended December 30, 1995, three months ended December 
31, 1994 and year ended September 30, 1994 was $1,950,  $1,685, $37 and $65, 
respectively.

Income Taxes

The Company accounts for income taxes using the asset and liability method. 
Under this 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.  Deferred tax assets and liabilities are measured using 
enacted tax rates applied to taxable income. The effect on deferred tax 
assets and liabilities of a change in tax rates is recognized in income in 
the period that includes the enactment date. A valuation allowance is 
provided for deferred tax assets when it is more likely than not that the 
asset will not be realized.

<PAGE>

                          Vista 2000, Inc. and Subsidiaries
                                           
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                           
                       December 28, 1996 and December 30, 1995
                 (Dollar amounts in thousands except per share data)
                                           


(1) Nature of Business and Summary of Significant Accounting Policies - 
Continued

Property, Equipment, Depreciation and Amortization   

Property and equipment are recorded at historical cost. The Company provides 
for depreciation and amortization using the straight-line method over the 
following estimated useful lives:

      Machinery and equipment              3 to 10 years
      Office Furniture and equipment       3 to 8 years
      Buildings                            35 years

Depreciation expense for the year ended December 28, 1996, year ended 
December 30, 1995, three month period ended December 31, 1994 and year ended 
September 30, 1994 was $2,108,  $611, $9 and $41, respectively.  

Warranty Costs and Returns

The Company provides for estimated warranty costs and returns at the time of 
sale. Accrued costs applicable to warranty obligations and returns are 
classified as accrued liabilities and are not material.

Research and Development Costs

Research and development costs are charged to expense as incurred and totaled 
$590, $297, $36 and $307 for the year ended December 28, 1996, year ended 
December 30, 1995, three month period ended December 31, 1994 and year ended 
September 30, 1994, respectively.

Foreign Currency Translation

Assets and liabilities of the Company's Canadian subsidiary are translated 
into U.S. dollars at fiscal year end exchange rates.  Income and expense 
accounts are translated into U.S. dollars at average rates of exchange 
prevailing during the year. Adjustments resulting from translating the 
Canadian accounts are reflected as a foreign currency translation adjustment 
in stockholders' equity.  Translation adjustments of the Mexican subsidiary, 
for which the functional currency is U.S. dollars, and transaction gains and 
losses are included in the results of operations for the year.

Net exchange losses included in the results of operations were not 
significant in any of the reported periods. 

<PAGE>
                          Vista 2000, Inc. and Subsidiaries
                                           
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                           
                       December 28, 1996 and December 30, 1995
                 (Dollar amounts in thousands except per share data)
                                           


(1) Nature of Business and Summary of Significant Accounting Policies - 
Continued

Net Loss Per Common Share

Net loss per common share has been calculated using the weighted average 
number of shares of common stock  outstanding during each period.  Fully 
diluted net loss per common share is not disclosed because the effect of 
common stock equivalents would be antidilutive.

Use of Estimates in the Preparation of Financial Statements

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

Fair Value of Financial Instruments

The Company's financial instruments include cash, cash equivalents and 
long-term debt.  The carrying value of cash and cash equivalents approximates 
fair value due to the relatively short period to maturity of the instruments. 
 The carrying value of the Company's long-term obligations approximates fair 
value based upon borrowing rates currently available to the Company for 
borrowings with comparable maturities.

Reclassifications

Certain amounts in the prior period financial statements have been 
reclassified to conform to the 1996 presentation. 
                                          
                                          
                                          
                                          
<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)


(2) INVENTORIES
 
Inventories consist of the following :
 
                                                      DECEMBER 28,  DECEMBER 30,
                                                          1996          1995
                                                      ------------  ------------

Raw Materials......................................   $    4,714    $    7,665
Work in Progress...................................        2,154         3,605
Finished Goods.....................................       18,289        22,108
                                                      ------------  ------------
                                                      $   25,157    $   33,378
                                                      ------------  ------------

(3) PROPERTY AND EQUIPMENT
 
Property and Equipment consists of the following:
 
                                                      DECEMBER 28,  DECEMBER 30,
                                                         1996          1995
                                                      ------------  ------------

Machinery and equipment............................   $    8,376    $    8,947
Buildings and improvements.........................        7,419         3,737
Office furniture and equipment.....................          847           665
                                                      ------------  ------------
    Total property and equipment...................       16,642        13,349
Less accumulated depreciation......................        2,372           680
                                                      ------------  ------------
                                                          14,270        12,669
Land...............................................        1,657           372
                                                      ------------  ------------
                                                      $   15,927    $   13,041
                                                      ------------  ------------
                                                      ------------  ------------



<PAGE>

                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)


(4) NOTES PAYABLE AND LONG-TERM LIABILITIES
 
NOTE PAYABLE
 
During 1996, Alabaster entered into a revolving credit and demand loan 
agreement (the Agreement) with a financial institution which provides for 
borrowings of up to $2,500, subject to certain restrictions as defined in the 
Agreement. As of December 28, 1996, maximum allowable borrowings under the 
Agreement were $1,250 of which $908 was outstanding. Interest is payable 
monthly at the greater of the prime rate plus 3.25% or 9% (effective rate of 
11.5% at December 28, 1996). The Agreement is collateralized by substantially 
all of the assets of Alabaster and is guaranteed by Vista.
 
LONG-TERM DEBT
 
Long-term debt, including capital lease obligations, consists of the 
following:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 28,  DECEMBER 30,
                                                                                           1996          1995
                                                                                       ------------  ------------
<S>                                                                                    <C>           <C>
ACPI revolving line of credit........................................................   $   20,400    $   22,600
ACPI mortgage note payable to a lender. Requires
  monthly payments of $37, including interest
  at 10%, through December 1997. All outstanding
  principal is due in January 1998. Collateralized
  by certain real, personal and intangible property of
  ACPI...............................................................................        3,207        --
Obligations under capital leases for equipment payable
  monthly over various terms through 1998. Interest is
  imputed at rates ranging from 7% to 18%. Future
  minimum payments required under capital leases
  total $338 at December 28, 1996....................................................          255           762
Other................................................................................           33           274
                                                                                       ------------  ------------
      Total long-term debt...........................................................       23,895        23,636
Less current maturities..............................................................          383           607
                                                                                       ------------  ------------
      Long-term debt.................................................................   $   23,512    $   23,029
                                                                                       ------------  ------------
                                                                                       ------------  ------------
</TABLE>


<PAGE>

                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(4) LONG-TERM DEBT - CONTINUED

Scheduled principal payments of long-term debt and capital lease obligations
are as follows:
 
FISCAL YEAR:
  1997..............................................    $     383
  1998..............................................        3,112
  1999..............................................           --
  2000..............................................       20,400
                                                        ---------
     Total..........................................    $  23,895
                                                        ---------
                                                        ---------

The ACPI revolving credit agreement is with two banks and provides for 
borrowings on a revolving line of credit of up to $28,900. The agreement 
expires in April 1997. Interest at the banks' base rate plus 3/8% (effective 
rate of 8.6% and 8.9% at December 28, 1996 and December 30, 1995, 
respectively) and a loan commitment fee of 3/8% on the unused portion of the 
revolving credit commitment are payable quarterly. On April 4, 1997, the 
Company entered into a commitment letter with another bank to refinance the 
existing revolving credit facility. The new credit facility, which will 
expire three years from closing, will provide for borrowings up to $30,000 
and consist of a revolving line of credit and an overadvance facility. The 
revolving line of credit provides for borrowings up to $28,000 based on a 
formula that includes eligible accounts receivable and inventories. The 
overadvance facility provides for additional borrowings of up to $2,000 upon 
ACPI's request and based on the bank's sole discretion. Interest is payable 
monthly at the bank's prime rate plus .5% or, at the ACPI's option, LIBOR 
plus 2.50%. Available interest rates may decrease based upon financial 
performance of the Company as defined. ACPI will incur an annual facility fee 
of $33 payable at the beginning of each contract year and a monthly loan 
commitment fee of 3/8% on the unused portion of the credit facility. The 
credit facility provides for certain restrictive covenants including, among 
others, limitations as to intercompany transfers and capital expenditures and 
maintenance of minimum levels of net worth. The credit facility is secured by 
essentially all the assets of the ACPI except for those owned by ACPI Real 
Estate, Inc. and Boss Manufacturing Real Estate, Inc. and is guaranteed by 
each of the ACPI's subsidiaries. The bank has also committed to $3,000 for 
letters of credit as part of the maximum borrowings under the line of credit.
 
During 1995, the Company entered into debt conversion agreements with 
officers or affiliates of officers whereby outstanding debt, plus accrued 
interest, totaling $720, was converted into 450,000 shares of common stock. 
The conversion share price of $1.60 was equal to approximately 85% of the 
market value of the stock at the time of approval by the Board of Directors.


<PAGE>

                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(4) LONG-TERM DEBT - CONTINUED

OTHER
 
Other long-term liabilities consist of extended terms on certain trade 
payables of Alabaster. The terms require monthly payments of approximately 
$19 through 1999.
 
(5) COMMITMENTS AND CONTINGENCIES
 
OPERATING LEASES
 
The Company leases certain office and operating facilities and certain 
equipment under operating lease agreements which expire on various dates 
through 2000 and require the Company to pay all maintenance costs. Rent 
expense under these leases was approximately $1,379, $809, $14, and $38 for 
the year ended December 28, 1996, year ended December 30, 1995, three month 
period ended December 31, 1994 and year ended September 30, 1994, 
respectively.
 
Commitments under noncancelable operating leases are summarized as follows:
 
FISCAL YEAR:
  1997...............................................    $     452
  1998...............................................          318
  1999...............................................           89
  2000...............................................           55
                                                         ---------
  Total..............................................    $     914
                                                         ---------
                                                         ---------

ACPI leased two facilities from related parties. The Company was responsible 
for repairs and maintenance, taxes and insurance of these facilities. 
Expenses for these operating leases were $639 and $735 in 1996 and 1995. ACPI 
purchased one of these facilities in October 1996 and purchased the second of 
these facilities subsequent to December 28, 1996 (see Note 8).


<PAGE>

                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(5) COMMITMENTS AND CONTINGENCIES - CONTINUED

CLASS ACTION LAWSUIT
 
In April 1996, the Company together with certain officers, directors and 
third parties had been named as a defendant in seventeen (17) class action 
lawsuits filed by stockholders of the Company in the United States District 
Court for the Northern District of Georgia. The lawsuits alleged that the 
Company violated the Federal Securities Laws, particularly Sections 10-b and 
20-a of the Securities Exchange Act of 1934, as amended, and the rules and 
regulations, including Rules 10-b-5 thereunder as well as common law claims.
 
In August 1996, the court certified the plaintiffs as representatives of a 
class of all persons who purchased the Company's common stock or warrants 
during the period October 24, 1994 through June 8, 1996, except for the 
defendants and certain officers, directors and related parties. The Company 
and the other defendants reached an agreement in principle to settle the 
action in December 1996. Pursuant to the settlement, the Company will issue a 
sufficient amount of shares of its common stock to the class to convey 
ownership of forty percent (40%) of the common stock of the Company to the 
class, based on common shares outstanding at December 1, 1996. The Company 
expects to issue approximately 14,454,000 common shares in accordance with 
the settlement. Approximately $903 has been charged to 1996 operations 
related to this settlement and is included in accrued liabilities at December 
28, 1996. The Company's insurance carrier will contribute $300 to the 
settlement to cover certain expenses related to the settlement. The 
settlement is in satisfaction of all claims of the class. The district court 
approved the settlement and the judgment became final on April 14, 1997.
 
OTHER LITIGATION

In July 1996, the Company commenced an action against Richard P. Smyth, a 
former officer and director, alleging that Mr. Smyth committed fraudulent and 
unlawful acts resulting in substantial harm to the Company and its 
shareholders. In September 1996, Mr. Smyth filed a counterclaim seeking, 
among other things, indemnification in connection with the class action 
lawsuit described above. The Company intends to vigorously pursue its action 
and contest the allegations in the counterclaim; however, management and 
legal counsel are unable to determine the possible outcome of this matter at 
this time.


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)

OTHER LITIGATION - CONTINUED

The Company is also a defendant or has been notified of claims in several 
other actions against it. In the opinion of management, the ultimate outcome 
of these actions will not have a material adverse effect on the financial 
position of the Company.
 
SEC INVESTIGATION
 
The Company has been notified by the Securities and Exchange Commission 
("SEC") that it had commenced a formal private investigation of the Company. 
The Company intends to cooperate with the SEC in this matter. The Company 
cannot predict the eventual outcome of this investigation. Independently, the 
Company through its Audit Committee has conducted an internal investigation 
of the facts and circumstances surrounding the investigation.

(6) STOCKHOLDER'S EQUITY
 
On March 11, 1994, the Board of Directors authorized a one-for-two reverse 
common stock split. On November 30, 1993, the Board of Directors authorized a 
two-for-three reverse common stock split. All references to number of shares 
and to stock warrants as well as per share information have been adjusted to 
reflect the stock splits on a retroactive basis.
 
WARRANTS
 
At December 30, 1995, warrants for the purchase of 36,408 shares of Company 
common stock that were issued in conjunction with debentures sold by the 
Company were issued and outstanding. These warrants expired as unexercised in 
January 1997. In addition, in March 1994, the Company issued 235,598 of its 
1994 convertible debenture warrants to all the former debenture holders that 
acquired common stock of the Company on September 30, 1993 pursuant to their 
right of conversion. The 1994 convertible debenture warrants each provide for 
the purchase of one share of common stock at an exercise price of $2.50 per 
share and may be exercised for a three year period commencing March 31, 1996. 

2,000,000 Series A warrants were outstanding at December 28, 1996, which were 
issued in connection with the Company's initial public offering. The warrants 
are exercisable at an exercise price of $7.00 per share through October 28, 
1998. Additionally, the Company agreed to sell to the Underwriters, as 
additional compensation, warrants to acquire units representing up to 100,000 
shares of common stock at $9.08 per share and up to 200,000 shares of common 
stock underlying the Series A warrants at $11.55 per share.


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(5) STOCKHOLDER'S EQUITY - CONTINUED

WARRANTS--CONTINUED
 
During 1995, the Company issued warrants to various consultants to acquire up 
to 645,529 common shares at prices per share ranging from $2.00 to $12.00. A 
$40 expense was recorded during 1995 as a result of the issuance of these 
warrants. During 1996 and 1995, warrants were exercised to acquire 20,000 and 
250,000 common shares, respectively.
 
COMMON STOCK ISSUED FOR SERVICES IN LIEU OF CASH
 
During 1995, the Company issued 280,000 shares of common stock to various 
consultants at per share market values at the agreement dates ranging from 
$1.88 to $2.06. In connection with the issuance of these shares, the Company 
recorded professional fees totaling $560.
 
STOCK OPTIONS
 
The Company has adopted two stock option plans providing for the issuance of 
options covering up to 8,000,000 shares of common stock to be issued to 
officers, directors, or consultants to the Company. Various vesting 
conditions apply to these options, based on either tenure or certain 
performance criteria. For options granted to employees at strike prices less 
than the fair market value of the underlying shares on the date of the grant, 
the difference in value is recognized as compensation expense over the 
applicable vesting periods. Options granted to nonemployees are recognized 
over the related service period based on the estimated fair value of the 
options This resulted in charges to operations amounting to $808 and $900 for 
the years ended December 28, 1996 and 1995, respectively.
 
Stock option transactions are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                          YEAR ENDED               YEAR ENDED                                       YEAR ENDED
                                      DECEMBER 28, 1996         DECEMBER 30, 1995       DECEMBER 31, 1994       SEPTEMBER 30, 1994
                                   ------------------------  -----------------------  ----------------------  ----------------------
<S>                                <C>          <C>          <C>         <C>          <C>        <C>          <C>        <C>
                                                 WEIGHTED                 WEIGHTED                WEIGHTED                WEIGHTED
                                                  AVERAGE                  AVERAGE                 AVERAGE                 AVERAGE
                                                 EXERCISE                 EXERCISE                EXERCISE                EXERCISE
                                     SHARES        PRICE       SHARES       PRICE      SHARES       PRICE      SHARES       PRICE
                                   -----------  -----------  ----------  -----------  ---------  -----------  ---------  -----------
Outstanding, beginning of
  period.........................    1,550,950   $    3.46      225,000   $    6.05     225,000   $  6.05        --       $   --
Granted..........................      420,000        3.63    1,759,350        3.24       --          --       225,000      6.05
Exercised........................     (678,450)       2.15     (208,400)       1.60       --          --         --           --
Cancelled........................   (1,173,950)       4.18     (225,000)       6.05       --          --         --           --
                                   -----------       -----   ----------       -----   ---------      ----     ---------    -----
Outstanding, end of period.......      118,550   $    4.51    1,550,950   $    3.46     225,000   $  6.05      225,000   $  6.05
                                   -----------       -----   ----------       -----   ---------     -----     ---------    -----
                                   -----------       -----   ----------       -----   ---------     -----     ---------    -----
</TABLE>


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
 
(6)STOCKHOLDER'S EQUITY - CONTINUED

STOCK OPTIONS - CONTINUED

The following table summarizes information about stock options outstanding at 
December 28, 1996:
<TABLE>
<CAPTION>
              OPTIONS OUTSTANDING AND EXERCISABLE
----------------------------------------------------------------
                                   WEIGHTED
                                    AVERAGE
                  NUMBER           REMAINING        WEIGHTED
 EXERCISE     OUTSTANDING AT      CONTRACTUAL        AVERAGE
   PRICE     DECEMBER 28, 1996   LIFE (YEARS)    EXERCISE PRICE
-----------  -----------------  ---------------  ---------------
<S>          <C>                <C>              <C>
 $    3.93          33,550               8.8        $    3.93
      4.50          45,000                .7             4.50
 $    5.00          40,000               8.8             5.00
                                          --
                   -------                              -----
                   118,550               5.7        $    4.51
                                          --
                                          --
                   -------                              -----
                   -------                              -----
</TABLE>

Subsequent to December 28, 1996, the Company granted 7,810,000 options to 
purchase common stock at an exercise price of $.03 per share to directors, 
employees and consultants. The options were granted effective December 31, 
1996 for prior and future services. One half of the options are vested upon 
sisuance and the remaining half vest on December 31, 1997. Compensation 
expense of $105 related to these options was recognized during the year ended 
December 28, 1996. The following table summarizes information about stock 
options outstanding on December 31, 1996:
 
<TABLE>
<CAPTION>
                                                               OPTIONS OUTSTANDING                 OPTIONS EXERCISABLE
                                                  ---------------------------------------------  -----------------------
<S>                                               <C>                <C>            <C>          <C>         <C>
                                                             WEIGHTED
                                                              AVERAGE      WEIGHTED                 WEIGHTED
                                             NUMBER          REMAINING      AVERAGE                  AVERAGE
                    EXERCISE             OUTSTANDING AT     CONTRACTUAL    EXERCISE      NUMBER     EXERCISE
                     PRICE              DECEMBER 31, 1996  LIFE (YEARS)      PRICE     EXERCISABLE    PRICE
                    ---------           -----------------  -------------  -----------  ----------  -----------
                     $0.03                   7,810,000            10.0     $    0.03    3,905,000   $    0.03
                      3.93                      33,550             8.8          3.93       33,550        3.93
                      4.50                      45,000             0.7          4.50       45,000        4.50
                     $5.00                      40,000             8.8          5.00       40,000        5.00
                                        -----------------          ---         -----   ----------       -----
                                             7,928,550             9.9     $    0.14    4,023,550   $    0.16
                                        -----------------          ---         -----   ----------       -----
                                        -----------------          ---         -----   ----------       -----
</TABLE>


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(6) STOCKHOLDER'S EQUITY - CONTINUED

STOCK OPTIONS - CONTINUED

The Company uses the intrinsic value method in accounting for its stock 
options issued to employees. In applying this method, no compensation cost 
has been recognized related to the granting of options to employees. Had 
compensation cost for the Company's stock options plans been determined based 
on the fair value at the grant dates for awards to employees under those 
plans, the Company's net loss and loss per share would have resulted in the 
pro forma amounts indicated below:
 
                                              1996         1995
                                          -----------   -----------

Net loss            As reported           $  (19,401)   $  (14,663)
                    Pro forma                (19,414)      (15,927)
 
Net loss per        As reported           $    (1.20)   $    (2.33)
  common share      Pro forma                  (1.20)        (2.53)


For purposes of the pro forma amounts above, the fair value of each option 
grant was estimated on the date of grant using the Black-Scholes 
options-pricing model with the following weighted-average assumptions used 
for grants in 1996 and 1995; expected volatility of 295% and 107%, risk-free 
interest rates of 5.9%-6.6%; and expected lives of 2 years.
 
STOCK RESCISSIONS
 
During 1996, certain shareholders rescinded approximately 220,000 shares of 
common stock previously issued and returned the shares to the Company. The 
Company holds these shares in treasury at amounts which were recorded when 
the shares and related options were issued, totaling approximately $933.


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(6) STOCKHOLER'S EQUITY - CONTINUED

Series Convertible Preferred Stock:
 
The Company has designated 142,000 of its 500,000 authorized preferred shares 
as follows:
 
                       SHARES AUTHORIZED       LIQUIDATION PREFERENCE PER SHARE
                       -----------------       --------------------------------

   Series A                100,000                         $   100
   Series B                 20,000                         $ 1,000
   Series C                  2,000                         $10,000
   Series D                 20,000                         $ 1,000
 
The remaining 358,000 authorized preferred shares have not been designated as 
a series. The preferred stock is recorded net of issuance costs.
 
The Company's preferred stock was issued in several series pursuant to 
separate subscription agreements.
 
The preferred stock is convertible into Company common stock based on a 
formula defined in the subscription agreements and is convertible at various 
times after its issuance. The conversion price is based on a discount to the 
market price of the Company's common stock on the date of conversion. Because 
the Company's common stock has been delisted by NASDAQ, there is uncertainty 
as to the number of shares of the Company's common stock required to be 
issued in a preferred stock conversion. The Company is working with the 
convertible preferred stockholders to resolve this issue.
 
The Company may not pay any common stock dividends unless all preferred 
dividends have been paid. Any remaining preferred shares will automatically 
convert to common shares at various times in 1997.
 
COMMITMENT TO ISSUE COMMON STOCK
 
Management expects that the Company will issue approximately 14,454,000 
shares of common stock during 1997 in connection with the settlement of a 
class action lawsuit filed by certain stockholders (see Note 5)


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(7) EMPLOYEE RETIREMENT SAVINGS PLAN
 
ACPI contributes to employee retirement plans covering substantially all of 
its employees. Charges to consolidated operations for these plans were as 
follows:
 
<TABLE>
<CAPTION>
                                                                                                  YEAR ENDED
                                                                                       --------------------------------
<S>                                                                                    <C>              <C>
                                                                                        DECEMBER 28,     DECEMBER 30,
                                                                                            1996             1995
                                                                                       ---------------  ---------------
Discretionary Contribution Profit Sharing--401(k)....................................     $     225        $     223
Multi-Employer Pension Plan..........................................................           507              774
                                                                                              -----            -----
                                                                                          $     732        $     997
                                                                                              -----            -----
                                                                                              -----            -----
</TABLE>
 
The contributions to the union sponsored, multi-employer pension plan were 
determined based upon the number of employees working per week. At January 1, 
1996, the date of the latest actuarial valuation, the plan administrator 
determined that the subsidiary would have no withdrawal liability with 
respect to the year ended December 28, 1996.
 
(8) RELATED PARTY TRANSACTIONS
 
At December 28, 1996, accrued expenses include $225 due to directors and an 
officer for consulting services.
 
In October 1996, ACPI, through one of its wholly-owned subsidiaries, 
purchased certain land and manufacturing facilities from a partnership 
controlled by certain officers of ACPI for $1,773 cash and assumption of a 
$3,227 mortgage note. This facility was previously leased by ACPI from the 
related party.
 
Subsequent to December 28, 1996, ACPI, through one of its wholly-owned 
subsidiaries, purchased a second manufacturing facility from a corporation 
controlled by certain officers of ACPI for $1,158 cash and assumption of a 
$842 mortgage note. This facility was previously leased by ACPI from the 
related parties.
 
At December 28, 1996, the Company has a note receivable outstanding from a 
former officer. This note is fully reserved pending final settlement with the 
Company.


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(9) Income Taxes
 
The Company's temporary differences result in a deferred income tax asset 
which is reduced to zero by a related valuation allowance, summarized as 
follows:
 
                                                  DECEMBER 28,  DECEMBER 30,
                                                      1996          1995
                                                  ------------  -------------
Deferred tax assets:
  Operating loss carryforwards.................   $   14,531     $   6,643
  Accounts receivable..........................          790         1,025
  Accruals.....................................          661           505
  Compensation related.........................          636           433
  Tax credit carryforwards.....................          236           210
  Fixed assets.................................       --                80
  Other........................................           28            31
                                                  ------------  ------------
    Gross deferred tax assets..................       16,882         8,927
    Deferred tax asset valuation allowance.....      (14,511)       (7,516)
                                                  ------------  ------------
  Net deferred tax asset.......................        2,371         1,411
                                                  ------------  ------------
Deferred tax liabilities:
  Inventories..................................        1,710         1,411
  Fixed assets.................................          661        --
                                                       2,371         1,411
                                                  ------------  ------------
Net deferred income tax asset..................   $   --         $  --
                                                  ------------  ------------
                                                  ------------  ------------

Included in the tax credit carryforward is approximately $206 of alternative 
minimum tax credits available to reduce future income taxes payable. These 
alternative minimum tax credits do not have an expiration date.
 
Income tax expense for 1996 consists primarily of current state taxes
attributable to ACPI and its subsidiaries.


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(9) INCOME TAXES - CONTINUED

At December 28, 1996, the Company had operating loss carryforwards for U.S. 
income tax purposes of approximately $38,240 available to reduce future 
taxable income, which expire as follows:
 
                                                 NET
      YEAR OF                                 OPERATING
    EXPIRATION                                  LOSS
   -------------                             -----------

       2002                                   $   1,834
       2006                                         377
       2007                                       2,540
       2008                                       1,693
       2009                                       8,483
       2010                                       4,500
       2011                                      18,813
                                              ---------
                                              $  38,240
                                              ---------
                                              ---------
 
Included in the operating loss carryforward is $1,834 of losses which expire 
in 2002 and which can only be utilized by the Boss Manufacturing subsidiary 
of ACPI. Additionally, the loss carryforward which expires in 2010 includes 
approximately $4,500 of losses, the utilization of which is limited to 
approximately $750 annually through 2000.
 
The Company has experienced a change in control, as defined under Section 382 
of the Internal Revenue Service Code, during 1995 and 1996. Additionally, 
management expects another change in control to occur during 1997 upon 
issuance of the common stock in settlement of the class action lawsuit 
described in Note 5. As a result, the utilization of a significant portion of 
the tax loss carryforwards will be limited on an annual basis and could 
expire unused.

(10) Writedown of Operating Assets
 
During 1996, Alabaster continued to incur significant operating losses. 
Management's estimates of future operations did not support the carrying 
amount of Alabaster's net assets. Accordingly, a change of $1,817 was 
recorded in the fourth quarter of 1996, representing management's estimate of 
the excesss of Alabaster's net assets over their estimated net realizable value.
 
<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(10) WRITEDOWN OF OPERATING ASSETS - CONTINUED
 
In September 1996, the Company closed the operations of Intelock and wrote 
down all remaining Intelock assets to their estimated net realizable value. 
Vista incurred a charge of $659 as a result of this write down. The assets 
and liabilities of Intelock included in the accompanying December 28, 1996 
consolidated balance sheet were not significant. Intelock, which was acquired 
by Vista in 1995, was a manufacturer and distributor of digital locking 
devices.
 
(11) ACQUISITIONS AND DISPOSITIONS
 
1996
 
In August 1996, the Company sold substantially all the assets of FSPI for 
$1,800 cash and a $100 promissory note. The purchaser also assumed 
substantially all operating liabilities of FSPI. Vista recognized a loss on 
the sale of FSPI assets of $8,783. FSPI was a manufacturer and distributor of 
gas detection devices and other home safety products.
 
In May 1996, ACPI sold the inventory, tooling and other supplies of a product 
line for $1,059 in cash. The sale resulted in a gain of $472.
 
The assets and liabilities remaining from the FSPI and the disposed product 
line operations included in the accompanying December 28, 1996 consolidated 
balanced sheet were not significant.

1995
 
During fiscal 1995 Vista completed four acquisitions and made one disposition 
which are summarized below.
 
Effective September 30, 1995, Vista acquired all of the outstanding common 
stock of ACPI through a cash tender offer totaling approximately $13,834 
exclusive of acquisition costs. ACPI manufactures and distributes consumer 
hardware products including key blanks, related key accessories, knives, 
letters, numbers, signs, gloves and pet products as well as other items.
 

<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(11) ACQUISITIONS AND DISPOSITIONS - CONTINUED

1995 - CONTINUED

Effective July 31, 1995, Vista acquired all of the outstanding common stock 
of Alabaster in exchange for 400,000 shares of common stock issued by Vista 
valued at $2 per share or $800, exclusive of acquisition costs. Alabaster 
manufactures and distributes injection molded plastic products for the 
housewares industry.
 
Effective June 30, 1995, Vista acquired all of the outstanding common stock 
of Intelock and certain manufacturing assets owned by the former parent of 
Intelock in exchange for 219,200 shares of common stock of Vista and warrants 
to acquire 138,400 common shares of Vista, together valued at $1,097, 
exclusive of $5 cash paid and acquisition costs. Intelock manufactures and 
distributes digital locking devices.
 
The acquisitions of ACPI, Alabaster and Intelock were accounted for as 
purchases. Accordingly, each of the purchase prices were allocated to assets 
and liabilities based on their estimated fair values at the date of 
acquisition. Results of operations of ACPI, Alabaster and Intelock have been 
included in the consolidated financial statements from the respective date of 
each acquisition.
 
Effective May 1995, Vista acquired all of the outstanding common stock of 
Promotional Marketing, Inc. (PMI) and executed a non-competition agreement 
with former principals of PMI for a total of $610 exclusive of acquisition 
costs. PMI provided direct marketing services to a variety of customers. The 
acquisition has been accounted for as a purchase using the equity method of 
accounting. Effective November 30, 1995, PMI sold substantially all of its 
operating assets net of operating liabilities back to a company owned by the 
former principals of PMI in exchange for a guaranty of payment on a note 
receivable held by Vista. Vista recognized a loss of $1,147 on the sale of 
PMI. The accompanying 1995 consolidated statement of operations includes 
PMI's results of operations for the seven month period from the acquisition 
date to the date of disposition of substantially all the operating assets and 
liabilities of PMI. Assets and liabilities remaining from PMI operations 
included in the December 30, 1995 consolidated balance sheet were not 
significant.


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(11) ACQUISITIONS AND DISPOSITIONS - CONTINUED

1995 - CONTINUED

The pro forma results of operations which follow assume that the acquisitions 
and dispositions of subsidiaries described above had occurred at the 
beginning of each period presented and include Vista, ACPI and Alabaster. In 
addition to combining the historical results of operations of the companies, 
the pro forma calculations include adjustments for the estimated effects on 
the Company's historical results of operations for depreciation, interest and 
other purchase accounting adjustments related to the acquisitions. These 
results are not necessarily indicative of the results that would have 
occurred if the transactions had occurred at the beginning of each period 
presented nor are the results indicative of future results.
 
 
<TABLE>
<CAPTION>
                                                                              UNAUDITED

                                                                                     THREE MONTH
                                                          YEAR ENDED    YEAR ENDED   PERIOD ENDED   YEAR ENDED
                                                         DECEMBER 28,  DECEMBER 30,  DECEMBER 31,  SEPTEMBER 30,
                                                             1996          1995          1994          1994
                                                         ------------  ------------  ------------  -------------
<S>                                                      <C>           <C>           <C>           <C>
Sales..................................................   $  108,967    $  115,150    $   29,750    $   118,998

Net earnings (loss)....................................       (6,832)       (8,272)         (255)           588

Net earnings (loss) per
 common share..........................................   $     (.43)   $    (1.29)   $     (.08)   $       .23
</TABLE>
 
(12) NEW ACCOUNTING PRONOUNCEMENT
 
The FASB has issued Statement of Financial Accounting Standards No. 128, 
Earnings Per Share, which is effective for financial statements issued after 
December 15, 1997. Early adoption of the new standard is not permitted. The 
new standard eliminates primary and fully diluted earnings per share and 
requires presentation of basic and diluted earnings per share together with 
disclosure of how the per share amounts were computed. The adoption of this 
new standard is not expected to have a material impact on the disclosure of 
earnings per share in the financial statements.


<PAGE>
                       VISTA 2000, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED

                    DECEMBER 28, 1996 AND DECEMBER 30, 1995
              (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

(13) Events (Unaudited) Subsequent to the Date of Auditors' Report
 
On April 15, 1997, employment agreements with two officers of ACPI were 
replaced with severance agreements. The severance agreements provide for 
minimum annual payments of $169 each through 1997. The severance agreements 
also provide for additional aggregate payments of up to $400 based upon the 
occurrence of certain events, as defined in the agreements.
 
On April 18, 1997, Vista sold all of its Intelock common stock for $5 cash 
and a $95 promissory note. The amount due under the note is subject to 
certain adjustments, the most significant of which is a $50 reduction in the 
amount of the note if principal payments of $45 are made within 120 days of 
closing.


<PAGE>

              Report of Independent Certified Public Accountants
                                 on Schedule




Board of Directors
Vista 2000, Inc.


In connection with our audit of the consolidated financial statements of 
Vista 2000, Inc. and subsidiaries referred to in our reported dated March 4, 
1997 (April 4, 1997 as to the second paragraph of Note 4 and April 14, 1997 
as to the fifth paragraph of Note 5), which is included in the annual report 
to security holders and incorporated by reference in Part II of this form, we 
have also audited Schedule II for the years ended December 28, 1996 and 
December 30, 1995. In our opinion, this schedule presents fairly, in all 
material respects, the information required to be set forth therein.



Atlanta, Georgia
March 4, 1997


<PAGE>

                      Vista 2000, Inc., and subsidiaries
 
                SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
 
<TABLE>
<CAPTION>
                     COLUMN A                         COLUMN B             COLUMN C             COLUMN D      COLUMN E
                     --------                        -----------  --------------------------  -------------  ---------
                                                     BALANCE AT      CHARGED       CHARGED                    BALANCE
                                                      BEGINNING     TO COSTS      TO OTHER                    AT END
                    DESCRIPTION                       OF PERIOD   AND EXPENSES    ACCOUNTS    DEDUCTIONS(1)  OF PERIOD
                    -----------                      -----------  -------------  -----------  -------------  ---------
<S>                                                  <C>          <C>            <C>          <C>            <C>
Year ended December 28, 1996
  Allowance for doubtful accounts and returns......   $   2,230     $     493     $  --         $   1,318    $   1,405
  Deferred tax asset valuation allowance...........       7,516         6,995        --            --           14,511
 
Year ended December 30, 1995
  Allowance for doubtful accounts and returns......          40         2,190        --            --            2,230
  Deferred tax asset valuation allowance...........       2,310         5,206        --            --            7,516
 
Three month period ended December 31, 1994
    Allowance for doubtful accounts and returns....           5            35        --            --               40
    Deferred tax asset valuation allowance.........       1,925           385        --            --            2,310
 
Year ended September 30, 1994
  Allowance for doubtful accounts and returns......      --                 5        --            --                5
  Deferred tax asset valuation allowance...........      --             1,925        --            --            1,925
</TABLE>
 
(1) - bad debt write offs
 
<PAGE>


                                  [LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT





The Board of Directors
Vista 2000, Inc.

We have audited the accompanying balance sheets of Vista 2000, Inc. as of
September 30, 1994, and December 31, 1994, and the related statement of income
(loss), stockholders' equity (deficit), and cash flows for the year ended
September 30, 1994 and the three month period ended December 31, 1994.  These
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit 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 audit provides a reasonable basis for our opinion.

On January 20, 1995, we originally reported on the September 30, 1994 financial
statements referred to above.  This report was issued prior to the discovery of
the matters set forth in Note 13 to the financial statements, wherein revisions
of amounts previously reported as of September 30, 1994, and for the year then
ended are described.

In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of Vista 2000, Inc. as of
September 30, 1994, and December 31, 1994 and the results of its operations and
its cash flows for the year and three month period, respectively then ended, in
conformity with generally accepted accounting principles.



/s/ J. Allen Seymour, CPA, P.C.

Certified Public Accountants
Athens, Georgia
May 17, 1996


<PAGE>


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

VISTA 2000, INC.

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

BALANCE SHEETS AS OF SEPTEMBER 30, 1994* AND DECEMBER 31, 1994

ASSETS:

<TABLE>
<CAPTION>
                                                             * 9/30/94       12/31/94
                                                            ----------     ----------
<S>                                                         <C>            <C>
CURRENT ASSETS:
  Cash and Cash Equivalents                                 $    4,235     $  448,517
  Accounts Receivable, Net of Allowance for Doubtful
    Accounts of $4,875 and $39,876, respectively                41,791         62,629
  Inventories                                                  624,207        688,338
  Prepaid Expenses                                              12,293         42,181
                                                            ----------     ----------
TOTAL CURRENT ASSETS                                           682,526      1,241,665
                                                            ----------     ----------

PROPERTY AND EQUIPMENT:
  Property and Equipment, at cost                              203,031        255,886
  Less: Accumulated Depreciation                                62,043         70,920
                                                            ----------     ----------
PROPERTY AND EQUIPMENT, NET                                    140,988        184,966
                                                            ----------     ----------

DEFERRED OFFERING COSTS                                        501,578         81,183
OTHER DEFERRED CHARGES                                          99,945         84,245
OTHER ASSETS                                                     4,672          5,172
                                                            ----------     ----------
TOTAL ASSETS                                                $1,429,709     $1,597,231
                                                            ----------     ----------
                                                            ----------     ----------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):

CURRENT LIABILITIES:
  Short-Term Debt                                           $1,127,500             $0
  Current Portion of Long Term Debt                            346,729        543,056
  Accounts Payable                                           1,522,580        647,143
  Accrual for Loss Resulting From Questionable Sales           635,000              0
  Accrued Liabilities                                          286,467        263,833
                                                            ----------     ----------
TOTAL CURRENT LIABILITIES                                    3,918,276      1,454,032
                                                            ----------     ----------

LONG-TERM DEBT                                                 688,965        152,235
                                                            ----------     ----------

TOTAL LIABILITIES                                            4,607,241      1,606,267
                                                            ----------     ----------

STOCKHOLDERS' EQUITY
  Preferred Stock, $1.00 par value,
   authorized 500,000 shares,
   no shares issued and outstanding
  Common Stock, $.01 par value, authorized
   10,000,000 shares;
   issued and outstanding 3,281,226 shares                      21,312         32,812
  Paid-In Capital in Excess of Par Value                     2,054,950      7,029,828
  Accumulated Deficit                                       (5,253,794)    (6,275,893)
  Less: Treasury Shares and Warrants - at cost,
        69,200 shares and Warrants to acquire
        138,400 shares                                                       (795,783)
                                                            ----------     ----------
TOTAL STOCKHOLDERS' EQUITY                                  (3,177,532)        (9,036)
                                                            ----------     ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $1,429,709     $1,597,231
                                                            ----------     ----------
                                                            ----------     ----------
</TABLE>

* AS REVISED.  SEE NOTE 13

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                     Page 2
<PAGE>

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

VISTA 2000, INC.

--------------------------------------------------------------------------------
STATEMENT OF INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 1994* AND THE THREE-MONTH PERIOD ENDED
DECEMBER 31, 1994


<TABLE>
<CAPTION>
                                                                           THREE-MONTH
                                                           * YEAR ENDED    PERIOD ENDED
                                                              9/30/94        12/31/94
                                                            ----------     ----------
<S>                                                         <C>            <C>
NET SALES                                                     $136,678         $1,318
COST OF SALES                                                  313,888         25,843
                                                            ----------     ----------
GROSS MARGIN                                                  (177,210)       (24,525)
                                                            ----------     ----------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                 1,721,190        858,649

                                                            ----------     ----------
OPERATING INCOME (LOSS)                                     (1,898,400)      (883,174)
                                                            ----------     ----------

OTHER INCOME AND EXPENSE:
  Other Income                                                  45,000          4,080
  Interest Expense                                            (266,100)      (143,005)
                                                            ----------     ----------
TOTAL OTHER INCOME AND EXPENSE                                (221,100)      (138,925)
                                                            ----------     ----------


NET INCOME (LOSS)                                          ($2,119,500)   ($1,022,099)
                                                            ----------     ----------
                                                            ----------     ----------

NET LOSS PER COMMON SHARE                                       ($0.99)        ($0.36)
                                                            ----------     ----------
                                                            ----------     ----------

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                   2,131,226      2,813,293
                                                            ----------     ----------
                                                            ----------     ----------
</TABLE>





* AS REVISED.  SEE NOTE 13

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                     Page 3
<PAGE>

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

VISTA 2000, INC.

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

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED SEPTEMBER 30, 1994* AND THE THREE-MONTH PERIOD ENDED
DECEMBER 31, 1994


<TABLE>
<CAPTION>
                                                                      ADDITIONAL                                           NET
                                               COMMON STOCK            PAID-IN      ACCUMULATED     TREASURY STOCK     STOCKHOLDERS
                                          SHARES         DOLLARS       CAPITAL        DEFICIT       SHARES  DOLLARS  EQUITY(DEFICIT)
                                        -------------------------     ----------     ----------    ----------------     ----------

<S>                                     <C>              <C>         <C>            <C>            <C>     <C>          <C>
BALANCE, SEPTEMBER 30, 1993              2,131,226        $21,312     $2,054,950    ($2,893,603)                 $0      ($817,341)

  Distribution to Stockholders                                                         (240,691)                          (240,691)
  Net Loss as Revised, See Note 13                                                   (2,119,500)                        (2,119,500)
                                        -------------------------     ----------     ----------    ----------------     ----------
BALANCE SEPTEMBER 30, 1994               2,131,226        $21,312     $2,054,950    ($5,253,794)                 $0     (3,177,532)

  Proceeds, Net of Issuance Costs of
    $1,339,000 From Public
    Offering of Common Stock             1,150,000         11,500      4,974,878                                         4,986,378
  Acquisition of Treasury
    Stock & Warrants                                                                               69,200  (795,783)      (795,783)
  Net Loss                                                                           (1,022,099)                        (1,022,099)
                                        -------------------------     ----------     ----------    ----------------     ----------
BALANCE, DECEMBER 31, 1994               3,281,226        $32,812     $7,029,828    ($6,275,893)   69,200 ($795,783)       ($9,036)
                                        -------------------------     ----------     ----------    ----------------     ----------
                                        -------------------------     ----------     ----------    ----------------     ----------
</TABLE>



* AS REVISED.  SEE NOTE 13

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

                                     Page 4
<PAGE>

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

VISTA 2000, INC.

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

STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1994* AND THE THREE-MONTH PERIOD ENDED
DECEMBER 31, 1994

<TABLE>
<CAPTION>
                                                                    THREE-MONTH
                                                     * YEAR ENDED   PERIOD ENDED
                                                        9/30/94       12/31/94
                                                     ------------   ------------
<S>                                                  <C>            <C>
CASH FLOWS FROM OPERATIONS
   Net Loss                                          ($2,119,500)   ($1,022,099)
   Add:  Charges Against Net Income Not Requiring
     the Outlay of Cash - Depreciation                    40,929          8,877
   Increase (Decrease) In:
     Accounts Payable                                   (146,503)      (875,437)
     Accrued Liabilities                                 837,049       (657,634)
   Decrease (Increase) In:
     Notes and Accounts Receivable                       157,185        (20,838)
     Deferred Charges                                    (99,945)       436,095
     Inventories                                         231,998        (64,132)
     Prepaid Expenses                                     31,466        (29,888)
     Other Assets                                                          (500)
                                                     -----------    -----------
TOTAL CASH FLOWS FROM OPERATIONS                     ($1,067,321)   ($2,225,556)
                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to Property and Equipment                   ($7,729)      ($52,855)
                                                     -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net Proceeds From (Repayment of)
     Short-Term Borrowings                               851,327     (1,127,500)
   Net Proceeds From Long-Term Debt                       24,109
   Principal Repayments on Long-Term Debt                              (340,403)
   Proceeds From Issuance of Common Stock                             6,350,000
   Offering Costs                                       (476,578)    (1,363,622)
   Increase in Accounts Payable Attributable to
     Deferred Offering Costs                             390,912
   Treasury Stock and Warrants Acquired                                (795,783)
                                                     -----------    -----------
                                                        $789,770     $2,722,692
                                                     -----------    -----------
TOTAL CASH FLOWS                                       ($285,280)      $444,281
CASH AT THE BEGINNING OF THE PERIOD                      289,515          4,235
                                                     -----------    -----------
CASH AT THE END OF THE PERIOD                             $4,235       $448,516
                                                     -----------    -----------
                                                     -----------    -----------

SUPPLEMENTAL DISCLOSURES:
   Interest Paid                                         $16,260       $392,844
                                                     -----------    -----------
                                                     -----------    -----------
   Income Taxes Paid                                          $0             $0
                                                     -----------    -----------
                                                     -----------    -----------

NONCASH INVESTING AND FINANCING ACTIVITIES:
   Note Payable Issued For Patent Rights                   9,309
   Note Payable Issued For Excess Over Cost of
     Patent Rights                                       240,691
                                                     -----------    -----------
       Total                                            $250,000             $0
                                                     -----------    -----------
                                                     -----------    -----------
</TABLE>


* AS REVISED.  SEE NOTE 13

--------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                     Page 5
<PAGE>

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

VISTA 2000, INC.

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

NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1994 AND DECEMBER 31, 1994


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     GENERAL - Vista 2000, Inc. ("the Company"), successor by merger to Firearm
     Safety Products, Inc. ("Firearm") was organized to design, develop,
     manufacture and market consumer products.  Firearm was organized on
     December 19, 1991 as Triggerguard, Inc., a Georgia corporation.  Effective
     August 10, 1992, the name of the Company was changed to Firearm Safety
     Products, Inc. Pursuant to a Plan and Agreement of Merger entered into
     October 20, 1993, Firearm was merged into VISTA 2000, Inc., ("Vista") a
     newly formed Delaware corporation.  In conjunction with the plan of merger,
     Family Safety Products, Inc. ("FSPI"), a Georgia corporation was formed as
     a wholly owned subsidiary of the Company, and assets and operations were
     transferred to FSPI.

     PUBLIC OFFERINGS -  On November 1, 1994, the Company completed a $5,500,000
     public offering of 1,000,000 units, each unit consisting of one share of
     Company common stock and Series A Warrants to purchase two common shares.
     Each warrant entitles the holder to purchase, for a period of 48 months
     ending October 26, 1998, one share of common stock at an exercise price of
     $7.00 per share during the first 24 months and $10.00 per share thereafter,
     subject to adjustment in certain circumstances.  In December, 1994, an
     additional 150,000 of the units, representing the underwriters' over-
     allotment option with respect to the offering, were sold.  The proceeds of
     this offering totaled $6,350,000.  Offering costs, which consisted of
     underwriting fees, and professional and consulting fees totaling
     $1,338,622, were offset against the total proceeds.

     CHANGE IN FISCAL YEAR - During 1995, the Company elected to change its
     fiscal year-end from September 30, to a 52/53 week year ending on the last
     Saturday in the calendar year.

     CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows,
     the Company considers all highly liquid debt instruments, purchased with a
     maturity of three months or less, to be cash equivalents.

     REVENUE RECOGNITION - The Company recognizes revenue and provides for the
     estimated cost of returns and allowances in the period the products are
     shipped.

     INVENTORIES - Inventories are stated at the lower of average cost or
     market.

     PROPERTY AND EQUIPMENT - Property and equipment are recorded at historical
     cost.  Costs for maintenance, repairs, and minor replacements are expensed
     as incurred.  The Company provides for depreciation and amortization using
     the straight-line method over the following estimated useful lives:

          Machinery and Equipment. . . . . . . . . .   3 to 10 Years
          Office Furniture and Equipment . . . . . .   3 to 8 Years

     Depreciation expense for year ended September 30, 1994 and the three month
     period ended December 31, 1994 was $40,929 and $8,877, respectively.

     ADVERTISING - All advertising costs are charged to expense as incurred.
     For the year ended September 30, 1994 and the three month period ended
     December 31, 1994, advertising costs charged to expense were $65,002 and
     $37,364, respectively.


                                     Page 6
<PAGE>

     INCOME TAXES - The Company accounts for income taxes using the asset and
     liability method as prescribed in Statement of Financial Accounting
     Standards No. 109, Accounting for Income Taxes.  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.  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.  Under Statement 109, the effect on deferred tax assets and
     liabilities of a change in tax rates is recognized in income in the period
     that includes the enactment date.

     RESEARCH AND DEVELOPMENT COSTS AND PRODUCT DEVELOPMENT COSTS - Research and
     development costs are expensed as incurred, and totaled $307,079 for the
     year ended September 30, 1994, and $36,017 for the three month period ended
     December 31, 1994.

     All product development costs are charged to expense as incurred until
     technological feasibility has been established for the product.  Product
     development costs incurred after technological feasibility has been
     established are capitalized and amortized, commencing with product release,
     on a straight line basis over twelve months, or the estimated useful life
     of the product whichever is shorter.  No product development costs were
     capitalized or amortized for the year ended September 30, 1994, or the
     three month period ended December 31, 1994.

     WARRANTY COSTS AND RETURNS - The Company provides for estimated warranty
     costs and returns at the time of sale.  Accrued costs applicable to
     warranty obligations and returns are classified as accrued liabilities and
     are not significant.

     NET LOSS PER COMMON SHARE - Net loss per share amounts are computed by
     dividing net loss for the period by the weighted average number of common
     shares and common equivalent shares outstanding.  Fully diluted net income
     per common share is not disclosed because the effect of common stock
     equivalents would be antidilutive.

     USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The
     preparation of financial statements in conformity with generally accepted
     accounting principles requires management to make estimates and assumptions
     that affect the reported amounts of assets and liabilities and disclosures
     of contingent assets and liabilities at the date of the financial
     statements and the reported amounts of revenues and expenses during the
     reporting period.  Actual results could differ from these estimates.

     FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company's financial instruments
     include cash, cash equivalents, and long-term debt.  The carrying value of
     cash and cash equivalents approximates the fair value due to the relatively
     short period to maturity of the instruments.  The carrying value of the
     Company's long-term obligations approximates fair value based upon
     borrowing rates currently available to the Company for borrowings with
     comparable maturities.

     RECLASSIFICATIONS - Certain amounts in the prior period financial
     statements have been reclassified to conform to the December 31, 1994
     presentation.


                                     Page 7
<PAGE>

2.   INVENTORIES

     As of September 30, 1994 and December 31, 1994, Inventories consisted of
     the following:

                                                         9/30/94       12/31/94
                                                       ---------      ---------
     Raw Materials . . . . . . . . . . . . . . . .     $ 676,755      $ 740,887
     Work in Progress. . . . . . . . . . . . . . .             0              0
     Finished Goods. . . . . . . . . . . . . . . .        30,722         30,722
                                                       ---------      ---------
        Total. . . . . . . . . . . . . . . . . . .       707,477        771,609
     Less:  Valuation and Return Allowance . . . .       (83,271)       (83,271)
                                                       ---------      ---------
        Net. . . . . . . . . . . . . . . . . . . .     $ 624,206      $ 688,338
                                                       ---------      ---------
                                                       ---------      ---------

3.   PROPERTY AND EQUIPMENT

     As of September 30, 1994 and December 31, 1994, Property and Equipment were
     as follows:

                                                         9/30/94       12/31/94
                                                       ---------      ---------
     Production Equipment. . . . . . . . . . . . .     $ 164,345      $ 210,771
     Office Furnishings and Equipment. . . . . . .        38,686         45,115
        Total at Cost. . . . . . . . . . . . . . .       203,031        255,886
                                                       ---------      ---------
     Less:  Accumulated Depreciation . . . . . . .       (62,042)       (70,920)
                                                       ---------      ---------
        Net. . . . . . . . . . . . . . . . . . . .     $ 140,988      $ 184,966
                                                       ---------      ---------
                                                       ---------      ---------

4.   DEFERRED OFFERING COSTS

     Deferred offering costs are issuance costs to be offset against proceeds
     from the sale of securities upon successful completion of a planned
     securities offering.  During the three month period ended December 31,
     1994, $501,376 in offering costs deferred as of September 30, 1994 were
     offset against the proceeds of the Company's initial public offering (See
     Note 9). As of December 31, 1994 deferred offering costs totaled $81,183.
     This amount was offset against the proceeds of a subsequent sale of stock
     (See Note 12).

5.   OTHER DEFERRED CHARGES

     In the year ended September 30, 1994, the Company entered into agreements
     with an advertising brokerage organization for the sale of certain products
     of the Company, with payment in the form of purchase credits, to be applied
     toward future advertising costs.  The agreement allows the Company to
     utilize the credits, when combined with a cash payment, to purchase
     advertising media, products and/or services over a two year period and may
     be renewed for an additional twelve months.  Revenue of $99,945 was
     recognized in this transaction which represented the cost to the Company of
     the inventory exchanged.  Deferred advertising costs arising from the
     transaction will be amortized to advertising expense over the two year
     period of the agreement.


                                     Page 8
<PAGE>

6.   SHORT TERM BORROWINGS:

     Short-term borrowings at September 30, 1994 included a bank note in the
     amount of $50,000, a loan from a stockholder of the company in the amount
     of $30,000, and additional short-term notes from unaffiliated individuals.
     All of these obligations were retired during the period October 1, 1994,
     through December 31, 1994.  The weighted average monthly interest rate on
     the borrowings was 17.09% for the year ended September 30, 1994.  As of
     September 30, 1994, the weighted average interest rate on the unpaid
     balance of these borrowings was 26.21%.

     Short Term Borrowings Consisted of the Following as of September 30, 1994
     and December 31, 1994:

                                                         9/30/94       12/31/94
                                                     -----------    -----------
     Bank Note . . . . . . . . . . . . . . . . . .   $    50,000    $         0
     Stockholder Loan. . . . . . . . . . . . . . .        30,000              0
     Additional Short-Term notes . . . . . . . . .     1,047,500              0
                                                     -----------    -----------
        Total. . . . . . . . . . . . . . . . . . .   $ 1,127,500    $         0
                                                     -----------    -----------
                                                     -----------    -----------

7.   LONG TERM DEBT

     Long-term debt consisted of the following as of September 30, 1994 and
     December 31, 1994:

                                                         9/30/94       12/31/94
                                                     -----------    -----------
     15% Convertible Debentures Due in 1994. . . .   $   328,000    $         0
     8% Note Payable to a Former Employee
        in Quarterly Installments of $5,187
        (See Note 11). . . . . . . . . . . . . . .        14,960          5,183
     15% Demand notes payable to Officers of the
       Company (See Note 11) . . . . . . . . . . .       288,100        286,165
     10% Note payable to ADF, Inc., a Corporation
       Owned by a Family Member of the Chairman
       of the Board of Directors,
        Due June 28, 1996. . . . . . . . . . . . .       150,000        150,000
     Obligations Under a Capital Lease . . . . . .         4,634          3,944
     8% Note Payable (See Note 11) . . . . . . . .       250,000        250,000
                                                     -----------    -----------
        Totals . . . . . . . . . . . . . . . . . .     1,035,694        695,292
     Less:  Current Maturities . . . . . . . . . .   (   346,729)   (   543,057)
                                                     -----------    -----------
        Total, Net of Current Maturities . . . . .   $   688,965    $   152,235
                                                     -----------    -----------
                                                     -----------    -----------

     Scheduled principal payments of long-term debt and capital lease
     obligations are as follows:


        Year Ending December 31, 1997. . . . . . .   $   152,235
                                                     -----------
                                                     -----------

     Substantially all of the Company's inventory, property, and equipment have
been pledged as collateral for the Company's long-term debt.


                                     Page 9
<PAGE>


8.   LEASES

     The Company leases its office and operating facilities and certain
     equipment under operating lease agreements which expire on various dates
     and require the company to pay all maintenance costs.  Rent expense under
     these leases was approximately $37,960 for the year ended September 30,
     1994, and $14,211 for the three month period ended December 31, 1994.

     Commitments under noncancelable operating leases are summarized as follows:

          Year Ending
          December 31
          -----------
          1995 . . . . . . . . . . . . . . . . . . . . . . .  $ 26,282
          1996 . . . . . . . . . . . . . . . . . . . . . . .     8,086
                                                              --------
                    Total. . . . . . . . . . . . . . . . . .  $ 34,368
                                                              --------
                                                              --------

9.   STOCKHOLDERS' EQUITY (DEFICIT)

     COMMON STOCK SPLIT - On March 11, 1994, the Board of Directors authorized a
     one-for-two reverse common stock split. On November 30, 1993, the Board of
     Directors authorized a two-for-three reverse common stock split.  All
     references to number of shares and to stock warrants as well as per share
     information have been adjusted to reflect the stock splits on a retroactive
     basis.

     COMMON STOCK WARRANTS - At December 31, 1994, warrants for the purchase of
     36,408 shares of Company common stock, that were issued in conjunction with
     debentures sold by the Company, were issued and outstanding. The warrants
     may be exercised in whole or in part at any time during the two year period
     beginning on the second anniversary of the date of issue of the warrant
     after which they expire. In addition, in May 1994, the Company issued
     235,598 of its 1994 Convertible Debenture Warrants to all the former
     debenture holders that acquired common stock of the Company on September
     30, 1993, pursuant to their right of conversion. The 1994 Warrants provide
     for the purchase of one share of common stock at an exercise price of $2.50
     per share and may be exercised for a three year period commencing 24 months
     from the date of issuance.

     Upon completion of the Company's public offering, the Company agreed to
     sell to the Underwriters as additional compensation, warrants to acquire
     units representing up to 100,000 shares of common stock at $9.08 per share,
     and up to 200,000 shares of common stock underlying the Series A Warrants
     at $11.55 per share.

     STOCK OPTION PLAN - On November 30, 1993, the Company adopted stock option
     plans providing for the issuance of options covering up to 550,000 shares
     of common stock to be issued to officers, directors or consultants to the
     Company

     On March 15, 1994, options to purchase 225,000 shares were granted to
     officers and directors of the Company with an exercise price of $6.05
     vesting at the rate of 75,000 shares annually from September 30, 1995
     through September 30, 1997.

     OPTIONS HELD BY FORMER EMPLOYEE - As a condition of separation from the
     Company, 83,333 shares of common stock originally issued to a former
     employee are held in escrow as collateral against the Company's obligation
     to the former employee (see Note 7). The Company granted to the President
     of the Company the right to purchase the 83,333 shares for $2,500 ($.03 per
     share) when the obligation to the former employee has been repaid.

     TREASURY STOCK AND WARRANTS - In November 1994, Greenway Capital
     Corporation ("Greenway"), managing underwriter for the Company's initial
     public offering, as agent for the Company (but without the


                                     Page 10
<PAGE>

     Company's knowledge or consent), repurchased 187,280 units for a total cost
     of $1,325,388. Later in the month (again, without the Company's knowledge),
     Greenway resold 120,000 of the units at a total price of $532,431. In
     December 1994, approximately $204,000 was transferred to Company's
     operating account. The Company held the  remaining units in treasury and
     utilized them in 1995 in connection with acquisition activity (See
     Note 12).

     In management's judgment, this unauthorized action by Greenway (which first
     came to the Company's attention on Friday, January 27, 1995) violates the
     underwriting agreement and other agreements between the Company and
     Greenway. The amount of any potential liability to the Company, or claim by
     the Company against Greenway Capital Corporation, resulting from these
     transactions, cannot be determined at this time.  The Company has
     considered several courses of action to protect its interests, including
     legal proceedings against Greenway and its principals.  However, due to the
     recent failure and subsequent liquidation of Adler Coleman Clearing
     Corporation, the clearing firm for Greenway, the Company does not feel, at
     this time, that further action would provide a reasonable return, though it
     continues to evaluate available options against Greenway and Adler Coleman.

     STOCK BUYBACK PROGRAM - On January 20, 1995, the Company announced a stock
     buyback program, where up to 200,000 shares of the Company's stock may be
     repurchased on the open market.  The shares thus acquired were used in
     acquisition activities (See Note 12).

10.  INCOME TAXES

     At December 31, 1994, the Company had net operating loss carryforwards for
     federal income tax purposes of approximately $5 million which are available
     to offset future federal taxable income, if any, through 2009.  A valuation
     allowance has been provided for the deferred tax asset resulting from the
     net operating loss carryforwards.  Other temporary differences are
     insignificant.

11.  RELATED PARTY TRANSACTIONS

     During fiscal 1993, patent rights with respect to certain of the Company's
     products were held by Blue Ridge Ventures, Inc. ("BRV"), a corporation
     which was owned beneficially by the President and the Chairman of the Board
     of the Company as of December 31, 1994. Pursuant to an agreement between
     BRV and the Company, the Company acquired these patent rights on October 1,
     1993 for $250,000 payable October 1, 1995 with interest at 8% per annum.
     Under the terms of the agreement, the Company has the right to manufacture
     and market the products which utilize this patented technology.  No future
     royalty payments will be due to BRV, and BRV has agreed to waive and
     forgive all amounts that would have been due under the licensing agreement
     through September 30, 1993. Accordingly, royalties of approximately $37,245
     incurred by the Company in fiscal 1993 have been reported as additional
     contributed capital. The Company paid legal costs of approximately $12,715
     in connection with the patent applications. The stockholders of BRV
     incurred expenses of approximately $9,300 in connection with the original
     issuance of the patent rights. The excess of the purchase price for the
     patent rights paid by the Company over the cost incurred by the
     stockholders of BRV was accounted for by the Company as a distribution to
     stockholders.

     The Company borrowed $288,100 from the President of the Company and the
     Chairman of the Board of Directors. These loans are due on demand, although
     lenders have agreed not to seek repayment prior to fiscal year 1997.
     Additionally, $150,000 was borrowed by the Company from a corporation owned
     by a family member of the Chairman.  Interest expense on these notes was
     $9,519 in the year ended September 30, 1994, and $14,215  in the three
     month period ended December 31, 1994.


                                     Page 11
<PAGE>


12.  SUBSEQUENT EVENTS

     CLASS ACTION LAWSUITS - Subsequent to December 30, 1995, the Company,
     together with certain officers, directors and third parties, has been named
     as a defendant in fifteen (15) class action lawsuits filed by stockholders
     of the Company in the United States District Court for the Northern
     District of Georgia.  The lawsuits allege that the Company violated the
     Federal Securities Laws, particularly Sections 10-b and 20-a of the
     Securities Exchange Act of 1934, as amended, and the rules and regulations,
     including Rules 10-b-5 thereunder, as well as common law claims.  All
     plaintiffs are seeking certification of class action status.  The
     allegations collectively assert class action on behalf of persons who
     purchased Company stock between the dates of its initial public offering on
     or about August 1, 1994, and April 15, 1996.  The courts have not yet ruled
     on these class action motions.  An estimate cannot be made at this time as
     to the possible range of loss.  The Company intends to defend its position
     vigorously in all matters; however, management and legal counsel are unable
     to determine the possible outcome of these matters at this time.
     Accordingly, no liability for possible losses has been accrued for these
     matters.

     SEC INVESTIGATION - In April, 1996, the Company was notified by the
     Securities and Exchange Commission ("SEC") that it had commenced an
     informal investigation of the Company.  The Company has responded to the
     SEC's request for initial information and will continue to cooperate with
     the SEC in these matters.  The Company cannot predict the eventual outcome
     of this investigation.  Independently, the Company through its Audit
     Committee has conducted an internal investigation of the facts and
     circumstances surrounding the investigation.

     DEBT CONVERSION AGREEMENTS - During 1995, the Company entered into debt
     conversion agreements with officers or affiliates of officers whereby
     outstanding debt, plus accrued interest, totaling $720,000 was converted
     into 450,000 shares of common stock.  The conversion share price of $1.60
     was equal to approximately 85% of the market value of the stock at the time
     of approval by the Board of Directors.

     STOCK OFFERINGS - During 1995 the Company completed four preferred stock
     offerings and one common stock offering pursuant to the exemption from
     registration under Regulation S of the Securities Act of 1933.
     Approximately $24,296,000 and $6,787,000, net of issuance costs, were
     raised through the preferred stock offerings and the common stock
     offerings, respectively.

     During the first quarter of 1996, the Company raised approximately
     $21,200,000 through two separate convertible preferred stock offerings
     issued pursuant to Regulation S of the Securities Act of 1933.  The net
     proceeds of these offerings were used for investment in inventories and
     production equipment and funding of the general working capital needs of
     the Company.

     STOCK WARRANTS - During 1995, the Company issued warrants to various
     consultants to acquire up to 645,529 common shares at prices per share
     ranging from $2.00 to $12.00.  A $40,000 expense was recorded during 1995
     reflecting the excess of the market price of the Company's common shares as
     of the agreement date over the exercise price of the warrants.  During
     1995, warrants were exercised to acquire 250,000 of these common shares.

     STOCK OPTION PLANS - During 1995, the Company adopted stock option plans
     providing for the issuance of options covering up to 1,450,000 shares of
     common stock to be issued to officers, directors, or consultants to the
     Company.  Various vesting conditions apply to these options, based on
     either tenure or certain performance criteria.  For options granted at
     strike prices less than the fair market value of the underlying shares on
     the date of the grant, the difference in value is recognized as
     compensation expense over the applicable vesting periods.  This resulted in
     charges to income in 1995 of approximately $900,000.

     EMPLOYEE STOCK PURCHASE PLAN - Subsequent to December 31, 1994, the Board
     approved the adoption of an Employee Stock Purchase Plan and authorized the
     Company to reserve 2,000,000 for this plan.


                                     Page 12
<PAGE>


     COMMON STOCK ISSUED FOR SERVICES IN LIEU OF CASH - Subsequent to
     December 31, 1994, the Company issued 280,000 shares of common stock to
     various consultants at per share market values at the agreement dates
     ranging from $1.88 to $2.06.  During 1995, in connection with the
     issuance of these shares, the Company recorded professional fees totaling
     $560,000.

     SERIES CONVERTIBLE PREFERRED STOCK - Subsequent to December 31, 1994, the
     Company designated 142,000 of its 500,000 authorized preferred shares as
     follows:

                            Shares Authorized   Liquidation Preference Per Share
                            -----------------   --------------------------------
          Series A               100,000                   $   100
          Series B                20,000                   $ 1,000
          Series C                 2,000                   $10,000
          Series D                20,000                   $ 1,000

     The remaining 358,000 authorized preferred shares have not been designated
     as a series.

     The preferred stock is convertible into Company common stock based on the
     trading value of the stock (discounted at 18% to 20%) on the conversion
     dates declared by the holder of the preferred stock.  The preferred stock
     is convertible at various times after issuance, but generally within 60 to
     120 days.

     The Company may not pay any common stock dividends unless all preferred
     dividends have been paid.  Any remaining preferred shares will
     automatically convert to common shares at various times in 1997.

     ACQUISITIONS AND DISPOSITIONS - Subsequent to December 31, 1994, the
     Company completed four acquisitions and made one disposition which are
     summarized below:

     Effective September 30, 1995, the Company acquired approximately 96% of the
     outstanding common stock of American Consumer Products ("ACPI") through a
     cash tender offer totaling approximately $13,834,000, exclusive of
     acquisition costs.  ACPI manufactures and distributes consumer hardware
     products including key blanks, related key accessories, knives, letters,
     numbers, signs, gloves and pet products, as well as other items.

     Effective July 31, 1995, the Company acquired all of the outstanding common
     stock of Alabaster Industries, Inc. ("Alabaster") in exchange for 400,000
     shares of common stock issued by Vista valued at $2 per share or $800,000,
     exclusive of acquisition costs.  Alabaster manufactures and distributes
     injection molded plastic products for the housewares industry.

     Effective June 30, 1995, the Company acquired all of the outstanding common
     stock of Intelock Technologies ("Intelock") in exchange for 219,200 shares
     of common stock of Vista and warrants to acquire 138,400 common shares of
     Vista, together valued at $1,097,000, exclusive of $5,000 cash paid and
     acquisition costs.  Intelock manufactures and distributes digital locking
     devices.

     Effective May, 1995, the Company acquired all of the outstanding common
     stock of Promotional Marketing, Inc. ("PMI"), and executed a non-
     competition agreement with former principals of PMI, for a total of
     $610,000, exclusive of acquisition costs.  PMI provides direct marketing
     services to a variety of customers.  Effective November 30, 1995, PMI sold
     substantially all of its operating assets, net of operating liabilities,
     back to a company owned by the former principals of PMI in exchange for a
     guaranty of payment on a note receivable held by the Company.


                                     Page 13
<PAGE>


13.  RESTATEMENT OF FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1994.

     The audited financial statements previously issued for the year ended
     September 30, 1994, have been restated to correct two prior period
     accounting adjustments.  First, previously recognized revenue for the sale
     of an exclusive license agreement for one of the Company's products,
     consideration for which was substantially in the form of a $1,155,000 note
     receivable, has been reversed as a result of a 1996 investigation initiated
     by the Audit Committee of the Board of Directors.  The investigation
     revealed that the license agreement transaction and the related note had no
     business substance.  Second, $635,000 of previously reported sales have
     been reversed also as a result of the Audit Committee investigation
     referred to above.  These sales transactions were determined to have been
     fictitious.  These two prior period adjustments resulted in a reduction of
     revenue, an increase in net loss and an increase in accumulated deficit,
     all in the amount of $1,790,000.

14.  CONTINGENT LIABILITIES

     The Company is involved in various lawsuits in the ordinary course of
     business.  These lawsuits primarily involve claims for damages arising out
     of commercial disputes.  Company management and its counsel are of the
     opinion that no material liability will result from these matters.



                         * * * * * * * * * * * * * * * *


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                                     Page 14