----

----

| [X ]                       | Quarterly Report      pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934  |
|----------------------------|----------------------------------------------------------------------------------------------------|
|                       |                                                                                               |
|                       |  For the      quarterly period ended August 31, 2007.                                         |
|                       |                                                                                               |
| [    ] | Transition Report      pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934 |
|                       |                                                                                               |
|                       | For the transition      period _____________ to ______________.                                    |

| Nevada(State      or other jurisdiction ofincorporation      or organization) |   | 68-0634458(IRS      Employer Identification Number) |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|

|   |   |   | Yes  x | No  o |
|--------|--------|--------|-------------|------------|

|   |   |   | Yes  o | No  x |
|--------|--------|--------|-------------|------------|

|   |   |   | Yes  o | No  x |
|--------|--------|--------|-------------|------------|

----

| PART I.  | Financial      Information |                                                                     |
|----------|----------------------------|--------------------------------------------------------------------------|
|     |                       |                                                                     |   |
|     | Item 1.                    | Financial      Statements                                                |   |
|     |                       |                                                                     |   |
|     |                       | Condensed Consolidated Balance      Sheets as of                         |   |
|     |                       | August 31, 2007      (Unaudited)                                         | 3 |
|     |                       |                                                                     |   |
|     |                       | Condensed Consolidated Statements      of Operations (Unaudited) for the |   |
|     |                       | Three Months Ended August 31, 2007      and 2006                         | 4 |
|     |                       |                                                                     |   |
|     |                       | Condensed Consolidated Statements      of Operations (Unaudited) for the |   |
|     |                       | Six Months Ended August 31, 2007      and 2006                           | 5 |
|     |                       |                                                                     |   |
|     |                       | Condensed Consolidated Statements      of Cash Flows (Unaudited) for the |   |
|     |                       | Six Months Ended August 31, 2007      and 2006                           | 6 |
|     |                       |                                                                     |   |
|     |                       | Notes to Condensed Consolidated      Financial Statements                | 7 |
|     |                       |                                                                     |   |
|     | Item 2.                    | Management’s Discussion and      Analysis or                       |   |
|     |                       | Plan of      Operation                                                   | 16 |
|     |                       |                                                                     |   |
|     | Item 3.                    | Controls and      Procedures                                             | 19 |
|     |                       |                                                                     |   |
| PART II. | Other      Information     |                                                                     |

|       |    |     |   |
|------------|---------|----------|--------|
|       | Item 6. | Exhibits | 20     |
|       |    |     |   |
|       |    |     |   |
| SIGNATURES | 21      |
|       |    |     |

----

| Item      1. | FINANCIAL      STATEMENTS |
|--------------|---------------------------|

| Visual Management Systems, Inc.      and Subsidiaries          |   |       |       |
|----------------------------------------------------------------|--------|------------|------------|
| Condensed Consolidated Balance      Sheets                     |   |       |       |
| August 31,    2007                                             |   |       |       |
|                                                           |   |       |       |
| Assets                                                         |   | 2007       |       |
|                                                           |   | (restated) |       |
| Current    assets                                              |   |       |       |
| Cash                                                           |   | $          | -          |   |
| Accounts      receivable                                       |   |       | 382,324    |   |
| Inventory                                                      |   |       | 464,181    |   |
| Prepaid      expenses                                          |   |       | 75,720     |   |
| Total current      assets                                      |   |       | 922,225    |   |
|                                                           |   |       |       |   |
| Property and equipment -      net                              |   |       | 569,153    |   |
| Equipment under capital leases -      net                      |   |       | 66,080     |   |
| Deposits and other      assets                                 |   |       | 123,047    |   |
| Intangible assets -      net                                   |   |       | 11,428     |   |
|                                                           |   |       | 769,708    |   |
|                                                           |   |       |       |   |
| TotalAssets                                                    |   | $          | 1,691,933  |   |
|                                                           |   |       |       |   |
| Liabilities and Stockholders'      Deficit                     |   |       |       |   |
|                                                           |   |       |       |   |
| Current      liabilities                                       |   |       |       |   |
| Bank    overdraft                                              |   | $          | 29,373     |   |
| Accounts      payable                                          |   |       | 1,326,987  |   |
| Accrued expenses and other current      liabilities            |   |       | 370,882    |   |
| Customer      Deposits                                         |   |       | 148,326    |   |
| Sales tax      payable                                         |   |       | 70,149     |   |
| Current portion of long-term      debt                         |   |       | 83,806     |   |
| Current portion of obligations      under capital leases       |   |       | 20,778     |   |
| Total current      liabilities                                 |   |       | 2,050,301  |   |
|                                                           |   |       |       |   |
| Convertible notes      payable                                 |   |       | 125,000    |   |
| Long-term debt - net of current      portion                   |   |       | 459,325    |   |
| Obligations under capital leases -      net of current portion |   |       | 40,130     |   |
| Loans payable -      stockholders                              |   |       | 23,956     |   |
|                                                           |   |       |       |   |
| Stockholders'      deficit                                     |   |       |       |   |
| Preferred    stock                                             |   |       | 1          |   |
| Commonstock                                                    |   |       | 6,949      |   |
| Additional      paid-in-capital                                |   |       | 6,261,230  |   |
| Treasury stock, at      cost                                   |   |       | (150,000   | ) |
| Accumulated      deficit                                       |   |       | (7,124,959 | ) |
| Total stockholders'      deficit                               |   |       | (1,006,779 | ) |
|                                                           |   |       |       |   |
| Total Liabilities and Stockhoders      Deficit                 |   | $          | 1,691,933  |   |

----

| Visual Management Systems, Inc.      and Subsidiaries    |   |       |       |   |   |   |
|----------------------------------------------------------|--------|------------|------------|--------|--------|--------|
| Condensed Statements of      Operations                  |   |       |       |   |   |   |
| For the Three Months Ended August      31, 2007 and 2006 |   |       |       |   |
|                                                     |   |       |       |   |   |   |
|                                                     |   |       |       |   |   |   |
|                                                     |   |       |       |   |   |   |
|                                                     |   | 2007       |       |   | 2006   |   |
|                                                     |   | (restated) |       |   |   |   |
|                                                     |   |       |       |   |   |   |
| Revenues -    net                                        |   | $          | 1,775,649  |   |   | $      | 1,048,252 |   |
|                                                     |   |       |       |   |   |   |   |   |
| Cost of      revenues                                    |   |       | 1,149,534  |   |   |   | 514,034 |   |
|                                                     |   |       |       |   |   |   |   |   |
| Grossprofit                                              |   |       | 626,115    |   |   |   | 534,218 |   |
|                                                     |   |       |       |   |   |   |   |   |
| Operating      expenses                                  |   |       | 2,210,528  |   |   |   | 879,865 |   |
|                                                     |   |       |       |   |   |   |   |   |
| Loss from      operations                                |   |       | (1,584,413 | )      |   |   | (345,647 | ) |
|                                                     |   |       |       |   |   |   |   |   |
| Other (income)      expenses                             |   |       |       |   |   |   |   |   |
| OtherIncome                                              |   |       | (234       | )      |   |   | (13 | ) |
| Interest      expense                                    |   |       | 46,161     |   |   |   | 19,918 |   |
|                                                     |   |       | 45,927     |   |   |   | 19,905 |   |
|                                                     |   |       |       |   |   |   |   |   |
| Net loss                                                 |   | $          | (1,630,340 | )      |   | $      | (365,552 | ) |
|                                                     |   |       |       |   |   |   |   |   |
| Deemed dividend on convertible      preferred stock      |   | $          | 635,582    |   |   | $      | - |   |
|                                                     |   |       |       |   |   |   |   |   |
| Net Loss applicable to common      stockholders          |   | $          | (2,265,922 | )      |   | $      | (365,552 | ) |
|                                                     |   |       |       |   |   |   |   |   |
|                                                     |   |       |       |   |   |   |   |   |
| Per share data (basic and      diluted)                  |   | $          | (0.34      | )      |   | $      | (0.04 | ) |
|                                                     |   |       |       |   |   |   |   |   |
| Weighted average common shares      outstanding          |   |       | 6,660,044  |   |   |   | 9,790,000 |   |

----

| Visual      Management Systems, Inc. and Subsidiaries  |   |    |                                                                                                       |   |   |
|--------------------------------------------------------|--------|---------|------------------------------------------------------------------------------------------------------------|--------|--------|
| Condensed      Statements of Operations                |   |    |                                                                                                       |   |   |   |   |   |
| For      the Six Months Ended August 31, 2007 and 2006 |   |    |                                                                                                       |   |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
|                                                   |   |    | 2007                                                                                                       |   |   |   | 2006 |   |
|                                                   |   |    | (restated)                                                                                                 |   |   |   |   |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Revenues      - net                                    |   | $       |     3,235,004                                                                          |   |   | $ | 1,957,553 |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Cost      of revenues                                  |   |    |          1,938,046                                            |   |   |   | 956,904 |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Gross      profit                                      |   |    |          1,296,958                                            |   |   |   | 1,000,649 |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Operating      expenses                                |   |    |          3,824,140                                            |   |   |   | 1,689,093 |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Loss      from operations                              |   |    |         (2,527,182                                                 | )      |   |   |            (688,444 | ) |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Other      (income) expenses                           |   |    |                                                                                                       |   |   |   |   |   |
| Interest      income                                   |   |    |                  (234 | )      |   |   |                    (97 | )  |
| Interest      expense                                  |   |    |             191,535                            |   |   |   |              29,905 |   |
|                                                   |   |    |             191,301                            |   |   |   |              29,808 |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Net      loss                                          |   | $  |       (2,718,483                                                             | )      |   | $ | (718,252 | ) |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Deemed      dividend on convertible preferred stock    |   | $       |         635,582                                                    |   |   | $ | - |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Net      Loss Applicable to common stockholders        |   | $  |      (3,354,065                                                                   | )      |   | $ | (718,252 | )  |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Per      share data (basic and diluted)                |   | $  |            (0.52                                    | )      |   | $ | (0.07 | ) |
|                                                   |   |    |                                                                                                       |   |   |   |   |   |
| Weighted      average common shares outstanding        |   |    |          6,473,907                                            |   |   |   |          9,790,000 |   |

----

| Visual Management Systems, Inc.      and Subsidiaries                           |   |       |       |   |   |   |
|---------------------------------------------------------------------------------|--------|------------|------------|--------|--------|--------|
| Statements of Cash      Flows                                                   |   |       |       |   |   |   |
| For the Six Months Ended August      31, 2007 and 2006                          |   |       |       |   |   |   |
|                                                                            |   |       |       |   |   |   |
|                                                                            |   | 2007       |       |   |   |   |
|                                                                            |   | (restated) |       |   | 2006   |   |
|                                                                            |   |       |       |   |   |   |
| Cash flows from operating      activities                                       |   |       |       |   |   |   |
| Net loss                                                                        |   | $          | (2,718,483 | )      |   | $      | (718,252 | ) |
| Adjustments to reconcile net loss      to net cash used by operating activities |   |       |       |   |   |
| Depreciation and      amortization                                              |   |       | 41,404     |   |   |   | 35,253 |   |
| Stock-based      compensation                                                   |   |       | 477,078    |   |   |   | 418,151 |   |
| Non-cash      interest                                                          |   |       | 177,232    |   |   |   |   |   |
| (Increase) decrease in operating      assets                                    |   |       |       |   |   |   |   |   |
| Accounts      receivable                                                        |   |       | (154,919   | )      |   |   | (48,759 | ) |
| Inventory                                                                       |   |       | (162,858   | )      |   |   | 25,147 |   |
| Prepaid expenses and other      assets                                          |   |       | (114,574   | )      |   |   | (28,208 | ) |
| Otherassets                                                                     |   |       | (7,090     | )      |   |   | (22,000 | ) |
| Increase (decrease) in operating      liabilities                               |   |       |       |   |   |   |   |   |
| Bank    Overdraft                                                               |   |       | 29,373     |   |   |   |   |   |
| Accounts      payable                                                           |   |       | 499,635    |   |   |   | 65,359 |   |
| Accrued expenses and other current      liabilities                             |   |       | 194,033    |   |   |   | 62,413 |   |
| Sales tax      payable                                                          |   |       | 2,322      |   |   |   | 23,178 |   |
| Customer      Deposits                                                          |   |       | 34,952     |   |   |   |   |   |
| Net cash used by operating      activities                                      |   |       | (1,701,895 | )      |   |   | (187,718 | ) |
|                                                                            |   |       |       |   |   |   |   |   |
| Cash flows from investing      activities                                       |   |       |       |   |   |   |   |   |
| Purchases of property and      equipment                                        |   |       | (75,140    | )      |   |   | (3,577 | ) |
|                                                                            |   |       |       |   |   |   |   |   |
| Cash flows from financing      activities                                       |   |       |       |   |   |   |   |   |
| Repayment of capital      leases                                                |   |       | -          |   |   |   | (7,365 | ) |
| Proceeds from convertible notes      payable                                    |   |       | 112,500    |   |   |   | 250,000 |   |
| Proceeds from the sale of common      stock                                     |   |       | 373,105    |   |   |   | - |   |
| Proceeds from      loans                                                        |   |       |       |   |   |   |   |   |
| Proceeds from the issuance of      preferred stock, net of issuance             |   |       |       |   |   |   |   |   |
| costs of $250,148 in      2007                                                  |   |       | 1,265,500  |   |   |   | - |   |
| Principal repayments of long-term      debt                                     |   |       | (52,230    | )      |   |   | (65,939 | ) |
| Proceeds from loans payable -      stockholders                                 |   |       | 17,956     |   |   |   | 72,616 |   |
| Net cash provided by financing      activities                                  |   |       | 1,716,831  |   |   |   | 249,312 |   |
|                                                                            |   |       |       |   |   |   |   |   |
| Decrease in      cash                                                           |   |       | (60,204    | )      |   |   | 58,017 |   |
|                                                                            |   |       |       |   |   |   |   |   |
| Cash                                                                            |   |       |       |   |   |   |   |   |
| Beginning of      period                                                        |   |       | 60,204     |   |   |   | 36,241 |   |
| End of    period                                                                |   | $          | -          |   |   | $      | 94,258 |   |

----

----

| 1. | Basis      of Presentation and Nature of Business  Operations |
|----|---------------------------------------------------------------|

----

----

|   |                                | Estimated    |   |
|--------|-------------------------------------|--------------|--------|
|   | Classification                      | Life (Years) |   |
|   |                                |         |   |
|   | Computer hardware and      software | 5 – 7  |   |
|   | Furniture and      fixtures         | 7            |   |
|   | Machinery and      equipment        | 5 – 7  |   |
|   | Vehicles                            | 5            |   |

----

|                                                                         |  2007 |                |
|------------------------------------------------------------------------------|------------|---------------------|
|                                                                         |       |                |   |
|                                                                         |       |                |   |
| Term loans payable, collateralized      by vehicles, due in monthly          |       |                |   |
| installments rangingfrom$404 - $612,      includinginterestat                |       |                |   |
| fixed rates ranging from 3.90% -      8.69% and maturing through             |       |                |   |
| November,    2012                                                            | $          | 395,713             |   |
|                                                                         |       |                |   |
| Term loan payable – due in monthly      installments of $794 including |       |                |   |
| interest at a fixed rate of 8.61%      andmaturing October      2013.The     |       |                |   |
| loan is securedbythe personalguarantee of the majority      stock-           |       |                |   |
| holder.                                                                      |       |        44,136  |   |
|                                                                         |       |                |   |
| Small Business Association term      loandue in monthly      installments    |       |                |   |
| of $2,282 includinginterest at afixed rate of 7.23% and      maturing        |       |                |   |
| January    2012.                                                             |       |        103,282 |   |
|                                                                         |       |                |   |
|                                                                         |       |        543,131 |   |
| Less: current      portion                                                   |       |        83,806  |   |
|                                                                         |       |                |   |
| Long-term debt – net of current      portion                           | $          | 459,325             |   |
|                                                                         |       |                |   |

|   | 2007       |   | $      | 84,000  |   |
|--------|------------|--------|--------|---------|--------|
|   | 2008       |   |   | 124,000 |   |
|   | 2009       |   |   | 112,000 |   |
|   | 2010       |   |   | 98,000  |   |
|   | 2011       |   |   | 93,000  |   |
|   | Thereafter |   |   | 32,000  |   |
|   |       |   |   |    |   |
|   |       |   | $      | 543,000 |   |
|   |       |   |   |    |   |

|                                                                 | 2007   |         |
|----------------------------------------------------------------------|--------|--------------|
|                                                                 |   |         |
| Equipmentleases – monthlypayments rangingfrom$83 - $282,       |   |         |
| Including interest between 15.33%      - 19.03% and maturing through |   |         |   |
| June 2010.                                                           | $      | 60,908       |   |
|                                                                 |   |         |   |
| Less:current portion                                                 |   | 20,778       |   |
|                                                                 |   |         |   |
| Obligations under capital leases –      net of current portion | $      |  40,130 |   |

|   |   |   |   |    |
|--------|--------|--------|--------|---------|
|   | 2008   |   | $      | 116,797 |   |
|   | 2009   |   |   | 73,342  |   |
|   | 2010   |   |   | 18,035  |   |
|   |   |   | $      | 208,174 |   |

----

----

|                          |   |   | 2007                    |   | 2006   |   |
|-------------------------------|--------|--------|-------------------------|--------|--------|--------|
|                          |   |   |                    |   |   |   |
| Risk      Free Rate of Return | 4.74%  |   | 4.90%                   |   |
| Option      lives             |   | 6.19   |         years | 10     |   |
| Annual      Volatility        |   | 148%   |                    | 150%   |   |

----

|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    | 2007                                                                                                                    |                                                                                                                                      | 2006                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    | Weighted                                                                                                                                  |                                                                                                                                      |                                                                                                                                      | Weighted                                                                                                                                  |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    | Avg                                                                                                                                       |                                                                                                                                      |                                                                                                                                      | Avg                                                                                                                                       |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    | Shares                                                                                                                  | Exercise    Price                                                                                                                         |                                                                                                                                      | Shares                                                                                                                                    | Exercise    Price                                                                                                                         |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
| Outstanding at February      28                                                                                                                                    |   |                                                                                                                                                                                       | 1,111,500                                                                                                               |  $                  2.50 |                                                                                                                                      | 705,000                                                                                                                                   |  $                     2.50 |                                                                                                                                      |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
| Granted                                                                                                                                                            |   |                                                                                                                                                                                       |                                                                                                                    | 58,000                                                                                                                  |          $                  2.81 |                                                                                                                                      | 240,000                                                                                                                                   |  $                     2.50 |   |   |
| Forfeited                                                                                                                                                          |   |                                                                                                                                                                                       |                                                                                                                    | 28,750                                                                                                                  |  $                  2.50                   |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
| Outstanding at August      31                                                                                                                                      |   |                                                                                                                                                                                       | 1,140,750                                                                                                               |  $                  2.52 |                                                                                                                                      | 945,000                                                                                                                                   |  $                     2.50 |                                                                                                                                      |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
| Options Exercisable at August      31                                                                                                                              |   | 810,500                                                                                                                                                                                    |  $                  2.50 |                                                                                                                    | 352,500                                                                                                                                   |  $                     2.50 |                                                                                                                                      |                                                                                                                                      |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
| The aggregate intrinsic value of      outstanding and exercisable shares at 8/31/07 was $ 1,050,650                                                      |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
| The weighted average fair value of      options issued at grant using the fair value method during the six months      ending August 31, 2007 was $ 3.12 |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    | Weighted                                                                                                                |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   | Shares      Outstanding                                                                                                                                                                    |                                                                                                                    | Avg                                                                                                                     |                                                                                                                                      | Exercisable                                                                                                                               |                                                                                                                                      |                                                                                                                                      |   |   |
| Exercise    prices                                                                                                                                                 |   | at 8/31/07                                                                                                                                                                                 |                                                                                                                    | Life                                                                                                                    |                                                                                                                                      | at 12/31/07                                                                                                                               |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
|  $                  2.50                                            |   |                          1,122,750                            |                                                                                                                    | 8.28                                                                                                                    |                                                                                                                                      | 807,500                                                                                                                                   |                                                                                                                                      |                                                                                                                                      |   |   |
|  $                  3.50                                            |   |                               18,000 |                                                                                                                    | 4.92                                                                                                                    |                                                                                                                                      | 3,000                                                                                                                                     |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                          1,140,750                            |                                                                                                                    | 7.56                                                                                                                    |                                                                                                                                      | 810,500                                                                                                                                   |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
| The company recognized      compensation expense from the vesting of stock options of approximately      $451,305 and $418,151                                     |   |                                                                                                                                                                                       |                                                                                                                    |
| for the six months ended August      31, 2007 and 2006 respectively.                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |
|                                                                                                                                                               |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |                                                                                                                                      |   |   |
| The Company's future compensation      expense from these stock options                                                                                            |   |                                                                                                                                                                                       |                                                                                                                    |                                                                                                                    |                                                                                                                                      |                                                                                                                                      |
| is estimated at $ 876,508 which will be amortized over      the remaining estimated weighted useful life of 15months.                                    |   |                                                                                                                                                                                       |                                                                                                                    |

----

| Visual Management Systems, Inc.      and Subsidiaries          |   |                        |       |   |     |   |       |
|----------------------------------------------------------------|--------|-----------------------------|------------|--------|----------|--------|------------|
| Notes to Condensed Consolidated      Financial Statements      |   |                        |       |   |     |   |       |
| August 31,    2007                                             |   |                        |       |   |     |   |       |   |   |
|                                                           |   | As previously      reported |       |   | Restated |   |       | Effect of |   |
| Assets                                                         |   | 2007                        |       |   | 2007     |   |       | Restatement |   |
|                                                           |   |                        |       |   |     |   |       |   |   |
| Current    assets                                              |   |                        |       |   |     |   |       |   |   |
| Cash                                                           |   | $                           | 41,152     |   |     | $      | -          |   |   | $ | (41,152 | ) |
| Accounts      receivable                                       |   |                        | 410,715    |   |     |   | 382,324    |   |   |   | (28,391 | ) |
| Inventory                                                      |   |                        | 1,437,382  |   |     |   | 464,181    |   |   |   | (973,201 | ) |
| Prepaid      expenses                                          |   |                        | 75,720     |   |     |   | 75,720     |   |   |   | - |   |
| Total current      assets                                      |   |                        | 1,964,969  |   |     |   | 922,225    |   |   |   | (1,042,744 | ) |
|                                                           |   |                        |       |   |     |   |       |   |   |   |   |   |
| Property and equipment -      net                              |   |                        | 569,153    |   |     |   | 569,153    |   |   |   | - |   |
| Equipment under capital leases -      net                      |   |                        | 66,080     |   |     |   | 66,080     |   |   |   | - |   |
| Deposits and other      assets                                 |   |                        | 123,047    |   |     |   | 123,047    |   |   |   | - |   |
| Intangible assets -      net                                   |   |                        | 3,482      |   |     |   | 11,428     |   |   |   | 7,946 |   |
|                                                           |   |                        | 761,762    |   |     |   | 769,708    |   |   |   | 7,946 |   |
|                                                           |   |                        |       |   |     |   |       |   |   |   |   |   |
| TotalAssets                                                    |   | $                           | 2,726,731  |   |     |   | 1,691,933  |   |   |   | (1,034,798 | ) |
|                                                           |   |                        |       |   |     |   |       |   |   |   |   |   |
| Liabilities and Stockholders'      Deficit                     |   |                        |       |   |     |   | -          |   |   |   |   |   |
|                                                           |   |                        |       |   |     |   | -          |   |   |   |   |   |
| Current      liabilities                                       |   |                        |       |   |     |   | -          |   |   |   |   |   |
| Bank    overdraft                                              |   |                        |       |   |     |   | 29,373     |   |   |   | 29,373 |   |
| Accounts      payable                                          |   | $                           | 2,150,960  |   |     |   | 1,326,987  |   |   |   | (823,973 | ) |
| Accrued expenses and other current      liabilities            |   |                        | 370,882    |   |     |   | 370,882    |   |   |   | - |   |
| Customer      Deposits                                         |   |                        | 152,447    |   |     |   | 148,326    |   |   |   | (4,121 | ) |
| Sales tax      payable                                         |   |                        | 70,149     |   |     |   | 70,149     |   |   |   | - |   |
| Current portion of long-term      debt                         |   |                        | 83,806     |   |     |   | 83,806     |   |   |   | - |   |
| Current portion of obligations      under capital leases       |   |                        | 20,778     |   |     |   | 20,778     |   |   |   | - |   |
| Total current      liabilities                                 |   |                        | 2,849,022  |   |     |   | 2,050,301  |   |   |   | (798,721 | ) |
|                                                           |   |                        |       |   |     |   |       |   |   |   | - |   |
| Convertible notes      payable                                 |   |                        | 125,000    |   |     |   | 125,000    |   |   |   | - |   |
| Long-term debt - net of current      portion                   |   |                        | 459,325    |   |     |   | 459,325    |   |   |   | - |   |
| Obligations under capital leases -      net of current portion |   |                        | 40,130     |   |     |   | 40,130     |   |   |   | - |   |
| Loans payable -      stockholders                              |   |                        | 23,956     |   |     |   | 23,956     |   |   |   | - |   |
|                                                           |   |                        |       |   |     |   | -          |   |   |   | - |   |
| Stockholders'      deficit                                     |   |                        |       |   |     |   | -          |   |   |   | - |   |
| Preferred    stock                                             |   |                        | 1          |   |     |   | 1          |   |   |   | - |   |
| Commonstock                                                    |   |                        | 5,218      |   |     |   | 6,949      |   |   |   | 1,731 |   |
| Additional      paid-in-capital                                |   |                        | 5,175,377  |   |     |   | 6,261,230  |   |   |   | 1,085,853 |   |
| Treasury stock, at      cost                                   |   |                        | (150,000   | )      |     |   | (150,000   | ) |   |   | - |   |
| Accumulated      deficit                                       |   |                        | (5,801,298 | )      |     |   | (7,124,959 | ) |   |   | (1,323,661 | ) |
| Total stockholders'      deficit                               |   |                        | (770,702   | )      |     |   | (1,006,779 | ) |   |   | (236,077 | ) |
|                                                           |   |                        |       |   |     |   |       |   |   |   | - |   |
|                                                           |   | $                           | 2,726,731  |   |     | $      | 1,691,933  |   |   | $ | (1,034,798 | ) |

----

| Visual Management Systems, Inc.      and Subsidiaries     |   |                        |       |   |        |   |       |
|-----------------------------------------------------------|--------|-----------------------------|------------|--------|-------------|--------|------------|
| Notes to Condensed Consolidated      Financial Statements |   |                        |       |   |        |   |       |   |   |
| Condensed Consolidated Statement      of Operations       |   |                        |       |   |        |   |       |   |   |
| Three Months Ended August 31,      2007                   |   |                        |       |   |        |   |       |   |   |
|                                                      |   | As previously      reported |       |   | As restated |   |       | EffectofRestatement |   |
|                                                      |   |                        |       |   |        |   |       |   |   |
| Revenues -    net                                         |   | $                           | 2,713,645  |   |        | $      | 1,775,649  |   |   | $ | (937,996 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Cost of      revenues                                     |   |                        | 1,129,430  |   |        |   | 1,149,534  |   |   |   | 20,104 |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Grossprofit                                               |   |                        | 1,584,215  |   |        |   | 626,115    |   |   |   | (958,100 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Operating      expenses                                   |   |                        | 2,764,784  |   |        |   | 2,210,528  |   |   |   | (554,256 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Loss from      operations                                 |   |                        | (1,180,569 | )      |        |   | (1,584,413 | ) |   |   | (403,844 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Other (income)      expenses                              |   |                        |       |   |        |   |       |   |   |   |   |   |
| Interest    income                                        |   |                        | (234       | )      |        |   | (234       | ) |   |   | - |   |
| Interest      expense                                     |   |                        | 20,561     |   |        |   | 46,161     |   |   |   | 25,600 |   |
|                                                      |   |                        | 20,327     |   |        |   | 45,927     |   |   |   | 25,600 |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Net loss                                                  |   | $                           | (1,200,896 | )      |        | $      | (1,630,340 | ) |   | $ | (429,444 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Deemed dividend on convertible      preferred stock       |   | $                           | -          |   |        | $      | 635,582    |   |   | $ | 635,582 |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Net Loss Applicable to common      stockholders           |   | $                           | (1,200,896 | )      |        | $      | (2,265,922 | ) |   | $ | (1,065,026 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Per share data (basic and      diluted)                   |   | $                           | (0.13      | )      |        | $      | (0.34      | ) |   | $ | (0.21 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Weighted average common shares      outstanding           |   |                        | 9,053,126  |   |        |   | 6,660,044  |   |   |   | (2,393,082 | ) |

----

| Visual Management Systems, Inc.      and Subsidiaries     |   |                        |       |   |        |   |       |
|-----------------------------------------------------------|--------|-----------------------------|------------|--------|-------------|--------|------------|
| Notes to Condensed Consolidated      Financial Statements |   |                        |       |   |        |   |       |   |   |
| Condensed Consolidated Statement      of Operations       |   |                        |       |   |        |   |       |   |   |
| Six Months Ended August 31,      2007                     |   |                        |       |   |        |   |       |   |   |
|                                                      |   |                        |       |   |        |   |       | Effect of |   |
|                                                      |   | As previously      reported |       |   | As restated |   |       | Restatement |   |
|                                                      |   |                        |       |   |        |   |       |   |   |
|                                                      |   |                        |       |   |        |   |       |   |   |
| Revenues -    net                                         |   | $                           | 3,883,450  |   |        | $      | 3,235,004  |   |   | $ | (648,446 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Cost of      revenues                                     |   |                        | 1,486,352  |   |        |   | 1,938,046  |   |   |   | 451,694 |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Grossprofit                                               |   |                        | 2,397,098  |   |        |   | 1,296,958  |   |   |   | (1,100,140 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Operating      expenses                                   |   |                        | 4,389,029  |   |        |   | 3,824,140  |   |   |   | (564,889 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Loss from      operations                                 |   |                        | (1,991,931 | )      |        |   | (2,527,182 | ) |   |   | (535,251 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Other (income)      expenses                              |   |                        |       |   |        |   |       |   |   |   |   |   |
| Interest    income                                        |   |                        | (234       | )      |        |   | (234       | ) |   |   | - |   |
| Interest      expense                                     |   |                        | 25,038     |   |        |   | 191,535    |   |   |   | 166,497 |   |
|                                                      |   |                        | 24,804     |   |        |   | 191,301    |   |   |   | 166,497 |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Net loss                                                  |   | $                           | (2,016,735 | )      |        | $      | (2,718,483 | ) |   | $ | (701,748 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Deemed Dividend on Convertible      Preferred Stock       |   | $                           | -          |   |        | $      | 635,582    |   |   | $ | 635,582 |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Net Loss Applicable to common      stockholders           |   | $                           | (2,016,735 | )      |        | $      | (3,354,065 | ) |   | $ | (1,337,330 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Per share data (basic and      diluted)                   |   | $                           | (0.23      | )      |        | $      | (0.52      | ) |   | $ | (0.29 | ) |
|                                                      |   |                        |       |   |        |   |       |   |   |   |   |   |
| Weighted average common shares      outstanding           |   |                        | 8,906,600  |   |        |   | 6,473,907  |   |   |   | (2,432,693 | ) |

----

| Visual Management Systems, Inc.      and Subsidiaries                           |   |                        |       |   |        |   |       |        |   |
|---------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|-------------|--------|------------|-------------|--------|
| Notes to Condensed Consolidated      Financial Statements                       |   |                        |       |   |        |   |       |        |   |
| Condensed Consolidated Statement      of Cash Flows                             |   |                        |       |   |        |   |       |        |   |
| Six Months Ended August 31,      2007                                           |   |                        |       |   |        |   |       |        |   |
|                                                                            |   |                        |       |   |        |   |       |        |   |
|                                                                            |   | As previously      reported |       |   | As restated |   |       | Effect of   |   |
|                                                                            |   |                        |       |   |        |   |       | Restatement |   |
|                                                                            |   |                        |       |   |        |   |       |        |   |
| Cash flows from operating      activities                                       |   |                        |       |   |        |   |       |        |   |
| Net loss                                                                        |   | $                           | (2,016,735 | )      |        | $      | (2,718,483 | )           |   | $ | (701,748 | ) |
| Adjustments to reconcile net loss      to net cash used by operating activities |   |                        |       |   |        |   |       |        |   |
| Depreciation and      amortization                                              |   |                        | 41,404     |   |        |   | 41,404     |        |   |   | - |   |
| Stock-based      compensation                                                   |   |                        | 381,184    |   |        |   | 477,078    |        |   |   | 95,894 |   |
| Non-cash      interest                                                          |   |                        |       |   |        |   | 177,232    |        |   |   | 177,232 |   |
| Change in deferred      revenue                                                 |   |                        | 152,447    |   |        |   | -          |        |   |   | (152,447 | ) |
| (Increase) decrease in operating      assets                                    |   |                        |       |   |        |   |       |        |   |   |   |   |
| Accounts      receivable                                                        |   |                        | 148,033    |   |        |   | (154,919   | )           |   |   | (302,952 | ) |
| Inventory                                                                       |   |                        | (1,024,376 | )      |        |   | (162,858   | )           |   |   | 861,518 |   |
| Prepaid expenses and other      assets                                          |   |                        | (66,541    | )      |        |   | (114,574   | )           |   |   | (48,033 | ) |
| Otherassets                                                                     |   |                        | (40,036    | )      |        |   | (7,090     | )           |   |   | 32,946 |   |
| Increase (decrease) in operating      liabilities                               |   |                        |       |   |        |   |       |        |   |   |   |   |
| Bank    overdraft                                                               |   |                        |       |   |        |   | 29,373     |        |   |   | 29,373 |   |
| Accounts      payable                                                           |   |                        | 969,123    |   |        |   | 499,635    |        |   |   | (469,488 | ) |
| Accrued expenses and other current      liabilities                             |   |                        | 167,836    |   |        |   | 194,033    |        |   |   | 26,197 |   |
| Sales tax      payable                                                          |   |                        | 34,902     |   |        |   | 2,322      |        |   |   | (32,580 | ) |
| Customer      deposits                                                          |   |                        |       |   |        |   | 34,952     |        |   |   | 34,952 |   |
| Net cash used by operating      activities                                      |   |                        | (1,252,759 | )      |        |   | (1,701,895 | )           |   |   | (449,136 | ) |
|                                                                            |   |                        |       |   |        |   |       |        |   |   |   |   |
| Cash flows from investing      activities                                       |   |                        |       |   |        |   |       |        |   |   |   |   |
| Purchases of property and      equipment                                        |   |                        | (75,140    | )      |        |   | (75,140    | )           |   |   | - |   |
|                                                                            |   |                        |       |   |        |   |       |        |   |   |   |   |
| Cash flows from financing      activities                                       |   |                        |       |   |        |   |       |        |   |   |   |   |
| Repayment of capital      leases                                                |   |                        | -          |   |        |   | -          |        |   |   | - |   |
| Proceeds from convertible notes      payable                                    |   |                        | 125,000    |   |        |   | 112,500    |        |   |   | (12,500 | ) |
| Proceeds from the sale of common      stock                                     |   |                        | 108,355    |   |        |   | 373,105    |        |   |   | 264,750 |   |
| Proceeds from the issuance of      preferred stock, net of issuance             |   |                        |       |   |        |   |       |        |   |   |   |   |
| costs of $250,148 in      2007                                                  |   |                        | 995,935    |   |        |   | 1,265,500  |        |   |   | 269,565 |   |
| Principal repayments of long-term      debt                                     |   |                        | (67,284    | )      |        |   | (52,230    | )           |   |   | 15,054 |   |
| Proceeds from loans payable -      stockholders                                 |   |                        | 17,956     |   |        |   | 17,956     |        |   |   | - |   |
| Net cash provided by financing      activities                                  |   |                        | 1,179,962  |   |        |   | 1,716,831  |        |   |   | 536,869 |   |
|                                                                            |   |                        |       |   |        |   |       |        |   |   |   |   |
| Decrease in      cash                                                           |   |                        | (147,937   | )      |        |   | (60,204    | )           |   |   | 87,733 |   |
|                                                                            |   |                        |       |   |        |   |       |        |   |   |   |   |
| Cash                                                                            |   |                        |       |   |        |   |       |        |   |   |   |   |
| Beginning of      period                                                        |   |                        | 189,089    |   |        |   | 60,204     |        |   |   | (128,885 | ) |
| End of    period                                                                |   | $                           | 41,152     |   |        | $      | -          |        |   | $ | (41,152 | ) |

----

----

----

|   |    |                                                                                                                                                                                                                    |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | misunderstandings      of certain applications of Generally Accepted Accounting Principles (GAAP)      and poor oversight and management of accounting staff and technology by      our former Chief Financial Officer; |
|   |    |                                                                                                                                                                                                                    |
|   | • | deficiencies      in our information technology relating to inventory control, revenue      recognition, financial forecasting and the management of inter-company      transactions;                                   |
|   |    |                                                                                                                                                                                                                    |
|   | • | a      lack of uniformity in accounting policies across subsidiaries which      allowed and increased the number of undetected discrepancies in      inter-company transactions;                                        |
|   |    |                                                                                                                                                                                                                    |
|   | • | the      lack of a formal documented closing process for period ends;      and                                                                                                                                          |
|   |    |                                                                                                                                                                                                                    |
|   | • | the      lack of a formal process for developing recent period results or forward      looking financial forecasts.                                                                                                     |

----

| Exhibit      No.  |   | Exhibits                                                                                                                    |
|------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|
| 31.1                   |   | Certification      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of      the Sarbanes-Oxley Act of 2002 |
| 31.2                   |   | Certification      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of      the Sarbanes-Oxley Act of 2002 |
| 32.1                   |   | Certification      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 |
| 32.2                   |   | Certification      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 |

----

|                     | Visual Management      Systems, Inc. |                                       |
|--------------------------|--------------------------------------|--------------------------------------------|
|                     | (Registrant)                         |                                       |
|                     |                                 |                                       |   |
|                     | By:                                  | /s/ Jason      Gonzalez               |   |
|                     |                                 | Jason      Gonzalez                        |   |
|                     |                                 | President      and Chief Executive Officer |   |
| Dated:      May 16, 2008 |                                 |                                       |   |
|                     |                                 |                                       |   |
|                     |                                 |                                       |   |

|                     | By:    | /s/ Frank      Schmid           |   |
|--------------------------|--------|--------------------------------------|--------|
|                     |   | Frank      Schmid                    |   |
|                     |   | Interim      Chief Financial Officer |   |
| Dated:      May 16, 2008 |   |                                 |   |