----

----

| x      | Quarterly      Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934  |
|--------|----------------------------------------------------------------------------------------------------|
|   |                                                                                               |
|   | For      the quarterly period ended September 30, 2007.                                            |
|   |                                                                                               |
| o      | 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) |
|-------------------------------------------------------------------------------|-----------------------------------------------------|

   No o

----

----

| PART I.    | Financial      Information | Page      No.                                                                                                                |
|------------|----------------------------|------------------------------------------------------------------------------------------------------------------------------|
|       |                       |                                                                                                                         |
|       | Item      1.               | Financial      Statements                                                                                                    |   |
|       |                       |                                                                                                                         |   |
|       |                       | Condensed      Consolidated Balance Sheet (Unaudited) as of September 30,      2007                                          | 4 |
|       |                       |                                                                                                                         |   |
|       |                       | Condensed      Consolidated Statements of Operations (Unaudited) for the Three Months      Ended September 30, 2007 and 2006 | 5 |
|       |                       |                                                                                                                         |   |
|       |                       | Condensed      Consolidated Statements of Operations (Unaudited) for the Nine Months      Ended September 30, 2007 and 2007  | 6 |
|       |                       |                                                                                                                         |   |
|       |                       | Condensed      Consolidated Statements of Cash Flows (Unaudited) for the Nine Months      Ended September 30, 2007 and 2006  | 7 |
|       |                       |                                                                                                                         |   |
|       |                       | Notes      to Condensed Consolidated Financial Statements                                                                    | 8 |
|       |                       |                                                                                                                         |   |
|       | Item      2.               | Management’s      Discussion and Analysis or Plan of Operation                                                         | 17 |
|       |                       |                                                                                                                         |   |
|       | Item      3.               | Controls      and Procedures                                                                                                 | 19 |
|       |                       |                                                                                                                         |   |
| PART II.   | Other    Information       |                                                                                                                         |
|       |                       |                                                                                                                         |
|       | Item      6.               | Exhibits                                                                                                                     | 21 |
|       |                       |                                                                                                                         |   |
| SIGNATURES |                       | 22                                                                                                                           |

----

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

| Visual      Management Systems, Inc. and Subsidiaries          |   |
|----------------------------------------------------------------|--------|
| Condensed      Consolidated Balance Sheet                      |   |
|                                                           |   | Sept      30, 2007 |   |
| Assets                                                         |   | (restated) |   |
|                                                           |   |   |   |
| Current      assets                                            |   |   |   |
| Cash                                                           |   | $ | 93,815 |   |
| Accounts      receivable                                       |   |   | 335,705 |   |
| Inventory                                                      |   |   | 548,246 |   |
| Prepaid      expenses                                          |   |   | 63,003 |   |
| Total      current assets                                      |   |   | 1,040,769 |   |
|                                                           |   |   |   |   |
| Property      and equipment - net                              |   |   | 569,262 |   |
| Equipment      under capital leases - net                      |   |   | 66,080 |   |
| Deposits      and other assets                                 |   |   | 118,391 |   |
| Intangible      assets - net                                   |   |   | 3,290 |   |
|                                                           |   |   |   |   |
| Total      Assets                                              |   | $ | 1,797,792 |   |
|                                                           |   |   |   |   |
| Liabilities      and Stockholders' Deficit                     |   |   |   |   |
|                                                           |   |   |   |   |
| Current      liabilities                                       |   |   |   |   |
| Accounts      payable                                          |   | $ | 1,560,714 |   |
| Accrued      expenses and other current liabilities            |   |   | 483,440 |   |
| Customer      Deposits                                         |   |   | 158,285 |   |
| Sales      tax payable                                         |   |   | 87,906 |   |
| Current      portion of long-term debt                         |   |   | 111,014 |   |
| Current      portion of obligations under capital leases       |   |   | 23,688 |   |
| Convertible      notes payable                                 |   |   | 125,000 |   |
| Total      current liabilities                                 |   |   | 2,550,048 |   |
|                                                           |   |   |   |   |
|                                                           |   |   |   |   |
| Long-term      debt - net of current portion                   |   |   | 422,912 |   |
| Obligations      under capital leases - net of current portion |   |   | 35,200 |   |
| Loans      payable - stockholders                              |   |   | 9,000 |   |
|                                                           |   |   |   |   |
| Stockholders'      deficit                                     |   |   |   |   |
| Preferred      stock                                           |   |   | - |   |
| Common      stock                                              |   |   | 7,049 |   |
| Additional      paid-in-capital                                |   |   | 6,928,961 |   |
| Treasury      stock, at cost                                   |   |   | (150,000 | ) |
| Accumulated      deficit                                       |   |   | (8,005,378 | ) |
| Total      stockholders' deficit                               |   |   | (1,219,368 | ) |
|                                                           |   |   |   |   |
| Total      Liabilities and Stockholder's Deficit               |   | $ | 1,797,792 |   |

----

| Visual      Management Systems, Inc. and Subsidiaries  |   |       |       |   |   |   |
|--------------------------------------------------------|--------|------------|------------|--------|--------|--------|
| Condensed      Consolidated Statements of Operations   |   |       |       |   |   |   |
| For      the Quarter Ended September 30, 2007 and 2006 |   |
|                                                   |   | 2007       |       |   |   |   |
|                                                   |   | (restated) |       |   | 2006   |   |
|                                                   |   |       |       |   |   |   |
|                                                   |   |       |       |   |   |   |
| Revenues      - net                                    |   | $          | 1,857,272  |   |   | $      | 1,055,645 |   |
|                                                   |   |       |       |   |   |   |   |   |
| Cost      of revenues                                  |   |       | 1,015,401  |   |   |   | 605,675 |   |
|                                                   |   |       |       |   |   |   |   |   |
| Gross      profit                                      |   |       | 841,871    |   |   |   | 449,970 |   |
|                                                   |   |       |       |   |   |   |   |   |
| Operating      expenses                                |   |       | 2,895,077  |   |   |   | 1,280,090 |   |
|                                                   |   |       |       |   |   |   |   |   |
| Loss      from operations                              |   |       | (2,053,206 | )      |   |   | (830,120 | ) |
|                                                   |   |       |       |   |   |   |   |   |
| Other      (income) expenses                           |   |       |       |   |   |   |   |   |
| Debt      conversion expense                           |   |       | -          |   |   |   | 72,270 |   |
| Interest      income                                   |   |       | (229       | )      |   |   | - |   |
| Interest      expense                                  |   |       | 32,871     |   |   |   | 27,474 |   |
| Miscellaneous      income                              |   |       |       |   |   |   | (105 | ) |
|                                                   |   |       | 32,642     |   |   |   | 99,639 |   |
|                                                   |   |       |       |   |   |   |   |   |
| Net      loss                                          |   | $          | (2,085,848 | )      |   | $      | (929,759 | ) |
|                                                   |   |       |       |   |   |   |   |   |
| Deemed      dividend on convertible preferred stock    |   | $          | 635,582    |   |   | $      | - |   |
|                                                   |   |       |       |   |   |   |   |   |
| Net      Loss applicable to common stockholders        |   | $          | (2,721,430 | )      |   | $      | (929,759 | ) |
|                                                   |   |       |       |   |   |   |   |   |
| Per      share data - basic and diluted                |   | $          | (0.40      | )      |   | $      | (0.09 | ) |
|                                                   |   |       |       |   |   |   |   |   |
| Weighted      average number of common                 |   |       |       |   |   |   |   |   |
| shares      outstanding                                |   |       | 6,869,075  |   |   |   | 9,852,500 |   |

----

| Visual      Management Systems, Inc. and Subsidiaries      |   |       |       |   |   |   |
|------------------------------------------------------------|--------|------------|------------|--------|--------|--------|
| Condensed      Consolidated Statements of Operations       |   |       |       |   |   |   |
| For      the Nine Months Ended September 30, 2007 and 2006 |   |
|                                                       |   |       |       |   |   |   |
|                                                       |   | 2007       |       |   | 2006   |   |
|                                                       |   | (restated) |       |   |   |   |
|                                                       |   |       |       |   |   |   |
| Revenues      - net                                        |   | $          | 4,455,981  |   |   | $      | 3,028,183 |   |
|                                                       |   |       |       |   |   |   |   |   |
| Cost      of revenues                                      |   |       | 2,365,141  |   |   |   | 1,395,105 |   |
|                                                       |   |       |       |   |   |   |   |   |
| Gross      profit                                          |   |       | 2,090,840  |   |   |   | 1,633,078 |   |
|                                                       |   |       |       |   |   |   |   |   |
| Operating      expenses                                    |   |       | 6,045,451  |   |   |   | 2,652,150 |   |
|                                                       |   |       |       |   |   |   |   |   |
| Loss      from operations                                  |   |       | (3,954,611 | )      |   |   | (1,019,072 | ) |
|                                                       |   |       |       |   |   |   |   |   |
| Other      (income) expenses                               |   |       |       |   |   |   |   |   |
| Debt      conversion expense                               |   |       | 590,044    |   |   |   | 72,270 |   |
| Interest      income                                       |   |       | (281       | )      |   |   | (195 | ) |
| Interest      expense                                      |   |       | 204,497    |   |   |   | 39,996 |   |
| Miscellaneous      income                                  |   |       | -          |   |   |   | (105 | ) |
|                                                       |   |       | 794,260    |   |   |   | 111,966 |   |
|                                                       |   |       |       |   |   |   |   |   |
| Net      loss                                              |   | $          | (4,748,871 | )      |   | $      | (1,131,038 | ) |
|                                                       |   |       |       |   |   |   |   |   |
| Deemed      dividend on convertible preferred stock        |   | $          | 635,582    |   |   | $      | - |   |
|                                                       |   |       |       |   |   |   |   |   |
| Net      Loss applicable to common stockholders            |   | $          | (5,384,453 | )      |   | $      | (1,131,038 | ) |
|                                                       |   |       |       |   |   |   |   |   |
| Loss      per share (basic and diluted)                    |   | $          | (0.84      | )      |   | $      | (0.12 | ) |
|                                                       |   |       |       |   |   |   |   |   |
| Weighted      average number of common                     |   |       |       |   |   |   |   |   |
| shares      outstanding                                    |   |       | 6,401,071  |   |   |   | 9,810,833 |   |

----

| Visual      Management Systems, Inc. and Subsidiaries                              |   |       |       |   |   |   |
|------------------------------------------------------------------------------------|--------|------------|------------|--------|--------|--------|
| Condensed      Consolidated Statements of Cash Flows                               |   |       |       |   |   |   |
| For      the Nine Months Ended September 30, 2007 and 2006                         |   |
|                                                                               |   |       |       |   |   |   |
|                                                                               |   | 2007       |       |   | 2006   |   |
|                                                                               |   | (restated) |       |   |   |   |
| Cash      flows from operating activities                                          |   |       |       |   |   |   |
| Net      loss                                                                      |   | $          | (4,748,871 | )      |   | $      | (1,131,038 | ) |
| Adjustments      to reconcile net loss to net cash used by operating    activities |   |       |       |   |   |
| Depreciation      and amortization                                                 |   |       | 81,025     |   |   |   | 57,134 |   |
| Non-cash      interest expense                                                     |   |       | 163,137    |   |   |   |   |   |
| Payment      of stock for services                                                 |   |       | 390,000    |   |   |   |   |   |
| Stock-based      compensation                                                      |   |       | 876,044    |   |   |   | 627,527 |   |
| Debt      conversion expense                                                       |   |       | 590,044    |   |   |   | 72,270 |   |
| Bank      overdraft                                                                |   |       |       |   |   |   |   |   |
| (Increase)      decrease in operating assets                                       |   |       |       |   |   |   |   |   |
| Accounts      receivable                                                           |   |       | 48,013     |   |   |   | (17,782 | ) |
| Inventory                                                                          |   |       | (302,207   | )      |   |   | (224,746 | ) |
| Prepaid      expenses and other assets                                             |   |       | (48,746    | )      |   |   | (6,347 | ) |
| Deposits      and other assets                                                     |   |       | (59,491    | )      |   |   | (24,953 | ) |
| Increase      (decrease) in operating liabilities                                  |   |       |       |   |   |   |   |   |
| Accounts      payable                                                              |   |       | 773,177    |   |   |   | 123,250 |   |
| Accrued      expenses and other current liabilities                                |   |       | 256,931    |   |   |   | 171,890 |   |
| Sales      tax payable                                                             |   |       | 65,375     |   |   |   | 20,692 |   |
| Customer      deposits                                                             |   |       | 136,199    |   |   |   | 40,000 |   |
| Net      cash used by operating activities                                         |   |       | (1,779,370 | )      |   |   | (292,103 | ) |
|                                                                               |   |       |       |   |   |   |   |   |
| Cash      flows from investing activities                                          |   |       |       |   |   |   |   |   |
| Purchases      of property and equipment                                           |   |       | (136,615   | )      |   |   | (21,169 | ) |
|                                                                               |   |       |       |   |   |   |   |   |
| Cash      flows from financing activities                                          |   |       |       |   |   |   |   |   |
| Repayment      of capital leases                                                   |   |       | (29,415    | )      |   |   | (9,294 | ) |
| Proceeds      from convertible notes payable (net of $12,500 issuance    costs)    |   |       | 112,500    |   |   |   | 325,000 |   |
| Proceeds      from the sale of common stock                                        |   |       | 871,230    |   |   |   | - |   |
| Repurchase      of stock into treasury                                             |   |       | (150,000   | )      |   |   |   |   |
| 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                                        |   |       | (59,035    | )      |   |   | (39,948 | ) |
| Proceeds      from loans payable - stockholders                                    |   |       | (1,943     | )      |   |   | 64,429 |   |
| Net      cash provided by financing activities                                     |   |       | 2,008,837  |   |   |   | 340,187 |   |
|                                                                               |   |       |       |   |   |   |   |   |
| Change      in cash                                                                |   |       | 92,852     |   |   |   | 26,915 |   |
|                                                                               |   |       |       |   |   |   |   |   |
| Cash                                                                               |   |       |       |   |   |   |   |   |
| Beginning      of period                                                           |   |       | 963        |   |   |   | 10,902 |   |
| End      of period                                                                 |   | $          | 93,815     |   |   | $      | 37,817 |   |

----

----

----

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

----

----

----

----

| Visual      Management Systems, Inc. and Subsidiaries                                                                         |   |                        |       |   |             |   |       |                       |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|------------------|--------|------------|----------------------------|--------|
| Notes      to Condensed Consolidated Balance Sheet at September 30,    2007                                                   |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |
| Assets                                                                                                                        |   | As      previously reported |       |   | As      restated |   |       | Impact      of restatement |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |
| Current      assets                                                                                                           |   |                        |       |   |             |   |       |                       |   |
| Cash                                                                                                                          |   | $                           | 111,105    |   |             | $      | 93,815     |                       |   | $ | (17,290 | ) |
| Accounts      receivable                                                                                                      |   |                        | 413,848    |   |             |   | 335,705    |                       |   |   | (78,143 | ) |
| Inventory                                                                                                                     |   |                        | 1,102,710  |   |             |   | 548,246    |                       |   |   | (554,464 | ) |
| Prepaid      expenses                                                                                                         |   |                        | 63,003     |   |             |   | 63,003     |                       |   |   | - |   |
| Total      current assets                                                                                                     |   |                        | 1,690,666  |   |             |   | 1,040,769  |                       |   |   | (649,897 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   | - |   |
| Property      and equipment - net                                                                                             |   |                        | 569,262    |   |             |   | 569,262    |                       |   |   | - |   |
| Equipment      under capital leases - net                                                                                     |   |                        | 66,080     |   |             |   | 66,080     |                       |   |   | - |   |
| Deposits      and other assets                                                                                                |   |                        | 118,391    |   |             |   | 118,391    |                       |   |   | - |   |
| Intangible      assets - net                                                                                                  |   |                        | 3,290      |   |             |   | 3,290      |                       |   |   | - |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   | - |   |
| Total      Assets                                                                                                             |   | $                           | 2,447,689  |   |             | $      | 1,797,792  |                       |   | $ | (649,897 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Liabilities      and Stockholders' Deficit                                                                                    |   |                        |       |   |             |   |       |                       |   |   |   |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Current      liabilities                                                                                                      |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Accounts      payable                                                                                                         |   | $                           | 1,886,460  |   |             | $      | 1,560,714  |                       |   | $ | (325,746 | ) |
| Accrued      expenses and other current liabilities                                                                           |   |                        | 483,440    |   |             |   | 483,440    |                       |   |   | - |   |
| Customer      Deposits                                                                                                        |   |                        | 158,285    |   |             |   | 158,285    |                       |   |   | - |   |
| Sales      tax payable                                                                                                        |   |                        | 87,906     |   |             |   | 87,906     |                       |   |   | - |   |
| Current      portion of long-term debt                                                                                        |   |                        | 111,014    |   |             |   | 111,014    |                       |   |   | - |   |
| Current      portion of obligations under capital leases                                                                      |   |                        | 23,688     |   |             |   | 23,688     |                       |   |   | - |   |
| Convertible      notes payable                                                                                                |   |                        | 125,000    |   |             |   | 125,000    |                       |   |   | - |   |
| Total      current liabilities                                                                                                |   |                        | 2,875,793  |   |             |   | 2,550,047  |                       |   |   | (325,746 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   | - |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Long-term      debt - net of current portion                                                                                  |   |                        | 422,912    |   |             |   | 422,912    |                       |   |   | - |   |
| Obligations      under capital leases - net of current portion                                                                |   |                        | 35,200     |   |             |   | 35,200     |                       |   |   | - |   |
| Loans      payable - stockholders                                                                                             |   |                        | 9,000      |   |             |   | 9,000      |                       |   |   | - |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   | - |   |
| Stockholders'      deficit                                                                                                    |   |                        |       |   |             |   |       |                       |   |   | - |   |
| Preferred      stock                                                                                                          |   |                        | 1          |   |             |   | 1          |                       |   |   | - |   |
| Common      stock                                                                                                             |   |                        | 5,218      |   |             |   | 7,049      |                       |   |   | 1,831 |   |
| Additional      paid-in-capital                                                                                               |   |                        | 5,388,090  |   |             |   | 6,928,961  |                       |   |   | 1,540,871 |   |
| Treasury      stock, at cost                                                                                                  |   |                        | (150,000   | )      |             |   | (150,000   | )                          |   |   | - |   |
| Accumulated      deficit                                                                                                      |   |                        | (6,138,525 | )      |             |   | (8,005,378 | )                          |   |   | (1,866,853 | ) |
| Total      stockholders' deficit                                                                                              |   |                        | (895,216   | )      |             |   | (1,219,367 | )                          |   |   | (324,151 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   | - |   |
| Total      Liabilities and Stockholder's Deficit                                                                              |   | $                           | 2,447,689  |   |             | $      | 1,797,792  |                       |   | $ | (649,897 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| The      accompanying notes to the Condensed Consolidated Financial Statements are      an integral part of these statements. |   |                        |       |   |             |

----

| Visual      Management Systems, Inc. and Subsidiaries                                                                         |   |                        |      |   |             |   |       |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|--------|------------------|--------|------------|
| Notes      to Condensed Consolidated Statements of Operations                                                                 |   |                        |      |   |             |   |       |
| For      the Quarter Ended September 30, 2007 and 2006                                                                        |   |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |
|                                                                                                                          |   | As      previously reported |      |   | As      restated |   |       | Impact      of restatement |   |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |
| Revenues      - net                                                                                                           |   | $                           | 3,103,957 |   |             | $      | 1,857,272  |   |   | $ | (1,246,685 | ) |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Cost      of revenues                                                                                                         |   |                        | 1,870,795 |   |             |   | 1,015,401  |   |   |   | (855,394 | ) |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Gross      profit                                                                                                             |   |                        | 1,233,162 |   |             |   | 841,871    |   |   |   | (391,291 | ) |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Operating      expenses                                                                                                       |   |                        | 1,573,124 |   |             |   | 2,895,077  |   |   |   | 1,321,953 |   |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Loss      from operations                                                                                                     |   |                        | (339,962  | )      |             |   | (2,053,206 | ) |   |   | (1,713,244 | ) |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Other      (income) expenses                                                                                                  |   |                        |      |   |             |   |       |   |   |   |   |   |
| Debt      conversion expense                                                                                                  |   |                        | -         |   |             |   | -          |   |   |   | - |   |
| Interest      income                                                                                                          |   |                        | (229      | )      |             |   | (229       | ) |   |   | - |   |
| Interest      expense                                                                                                         |   |                        | 9,033     |   |             |   | 32,871     |   |   |   | 23,838 |   |
| Miscellaneous      income                                                                                                     |   |                        | -         |   |             |   |       |   |   |   |   |   |
|                                                                                                                          |   |                        | 8,804     |   |             |   | 32,642     |   |   |   | 23,838 |   |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Net      loss                                                                                                                 |   | $                           | (348,766  | )      |             | $      | (2,085,848 | ) |   | $ | (1,737,082 | ) |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Deemed      dividend on convertible preferred stock                                                                           |   | $                           | -         |   |             | $      | 635,582    |   |   | $ | 635,582 |   |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Net      Loss applicable to common stockholders                                                                               |   | $                           | (348,766  | )      |             | $      | (2,721,430 | ) |   | $ | (2,372,664 | ) |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Per      share data - basic and diluted                                                                                       |   | $                           | (0.04     | )      |             | $      | (0.40      | ) |   | $ | (0.35 | ) |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| Weighted      average number of common                                                                                        |   |                        |      |   |             |   |       |   |   |   |   |   |
| shares      outstanding                                                                                                       |   |                        | 7,795,780 |   |             |   | 6,869,075  |   |   |   | (926,705 | ) |
|                                                                                                                          |   |                        |      |   |             |   |       |   |   |   |   |   |
| The      accompanying notes to the Condensed Consolidated Financial Statements are      an integral part of these statements. |   |

----

| Visual      Management Systems, Inc. and Subsidiaries                                                                         |   |                        |       |   |             |   |       |                       |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|------------------|--------|------------|----------------------------|--------|
| Notes      to Condensed Consolidated Statements of Operations                                                                 |   |                        |       |   |             |   |       |
| For      the Nine Months Ended September 30, 2007 and 2006                                                                    |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |
|                                                                                                                          |   | As      Previously Reported |       |   | As      Restated |   |       | Impact      of restatement |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |
| Revenues      - net                                                                                                           |   | $                           | 5,577,233  |   |             | $      | 4,455,981  |                       |   | $ | (1,121,252 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Cost      of revenues                                                                                                         |   |                        | 3,053,692  |   |             |   | 2,365,141  |                       |   |   | (688,551 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Gross      profit                                                                                                             |   |                        | 2,523,541  |   |             |   | 2,090,840  |                       |   |   | (432,701 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Operating      expenses                                                                                                       |   |                        | 5,435,220  |   |             |   | 6,045,451  |                       |   |   | 610,231 |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Loss      from operations                                                                                                     |   |                        | (2,911,679 | )      |             |   | (3,954,611 | )                          |   |   | (1,042,932 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Other      (income) expenses                                                                                                  |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Debt      conversion expense                                                                                                  |   |                        | 590,044    |   |             |   | 590,044    |                       |   |   | - |   |
| Interest      income                                                                                                          |   |                        | (281       | )      |             |   | (281       | )                          |   |   | - |   |
| Interest      expense                                                                                                         |   |                        | 16,158     |   |             |   | 204,497    |                       |   |   | 188,339 |   |
| Miscellaneous      income                                                                                                     |   |                        | -          |   |             |   | -          |                       |   |   | - |   |
|                                                                                                                          |   |                        | 605,921    |   |             |   | 794,260    |                       |   |   | 188,339 |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   | - |   |
| Net      loss                                                                                                                 |   | $                           | (3,517,600 | )      |             | $      | (4,748,871 | )                          |   | $ | (1,231,271 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Deemed      dividend on convertible preferred stock                                                                           |   | $                           | -          |   |             | $      | 635,582    |                       |   | $ | 635,582 |   |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Net      Loss applicable to common stockholders                                                                               |   | $                           | (3,517,600 | )      |             | $      | (5,384,453 | )                          |   | $ | (1,866,853 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Loss      per share (basic and diluted)                                                                                       |   | $                           | (0.33      | )      |             | $      | (0.84      | )                          |   | $ | (0.51 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| Weighted      average number of common                                                                                        |   |                        |       |   |             |   |       |                       |   |   |   |   |
| shares      outstanding                                                                                                       |   |                        | 10,722,561 |   |             |   | 6,401,071  |                       |   |   | (4,321,490 | ) |
|                                                                                                                          |   |                        |       |   |             |   |       |                       |   |   |   |   |
| The      accompanying notes to the Condensed Consolidated Financial Statements are      an integral part of these statements. |   |

----

| Visual      Management Systems, Inc. and Subsidiaries                                                                         |   |             |       |   |             |   |       |                       |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|------------------|------------|--------|------------------|--------|------------|----------------------------|--------|
| Notes      to Condensed Consolidated Statements of Cash Flows                                                                 |   |             |       |   |             |   |       |                       |   |
| For      the Nine Months Ended September 30, 2007 and 2006                                                                    |   |
|                                                                                                                          |   |             |       |   |             |   |       |                       |   |
|                                                                                                                          |   | As      reported |       |   | As      restated |   |       | Impact      of restatement |   |
|                                                                                                                          |   |             |       |   |             |   |       |                       |   |
| Cash      flows from operating activities                                                                                     |   |             |       |   |             |   |       |                       |   |
| Net      loss                                                                                                                 |   | $                | (3,517,600 | )      |             | $      | (4,748,871 | )                          |   | $ | (1,231,271 | ) |
| Adjustments      to reconcile net loss to net cash used by operating    activities                                            |   |             |       |   |             |   |       |                       |   |   |   |   |
| Depreciation      and amortization                                                                                            |   |             | 81,025     |   |             |   | 81,025     |                       |   |   | - |   |
| Non-cash      interest expense                                                                                                |   |             |       |   |             |   | 163,137    |                       |   |   | 163,137 |   |
| Payment      of stock for services                                                                                            |   |             |       |   |             |   | 390,000    |                       |   |   | 390,000 |   |
| Stock-based      compensation                                                                                                 |   |             | 562,630    |   |             |   | 876,044    |                       |   |   | 313,414 |   |
| Debt      conversion expense                                                                                                  |   |             | 590,044    |   |             |   | 590,044    |                       |   |   | - |   |
| Bank      overdraft                                                                                                           |   |             | (46,697    | )      |             |   |       |                       |   |   | 46,697 |   |
| (Increase)      decrease in operating assets                                                                                  |   |             |       |   |             |   |       |                       |   |   | - |   |
| Accounts      receivable                                                                                                      |   |             | (30,130    | )      |             |   | 48,013     |                       |   |   | 78,143 |   |
| Inventory                                                                                                                     |   |             | (856,671   | )      |             |   | (302,207   | )                          |   |   | 554,464 |   |
| Prepaid      expenses and other assets                                                                                        |   |             | (48,746    | )      |             |   | (48,746    | )                          |   |   | - |   |
| Deposits      and other assets                                                                                                |   |             | (60,067    | )      |             |   | (59,491    | )                          |   |   | 576 |   |
| Increase      (decrease) in operating liabilities                                                                             |   |             |       |   |             |   |       |                       |   |   | - |   |
| Accounts      payable                                                                                                         |   |             | 1,098,923  |   |             |   | 773,177    |                       |   |   | (325,746 | ) |
| Accrued      expenses and other current liabilities                                                                           |   |             | 256,930    |   |             |   | 256,930    |                       |   |   | - |   |
| Sales      tax payable                                                                                                        |   |             | 65,375     |   |             |   | 65,375     |                       |   |   | - |   |
| Customer      deposits                                                                                                        |   |             | 136,199    |   |             |   | 136,199    |                       |   |   | - |   |
| Net      cash used by operating activities                                                                                    |   |             | (1,768,785 | )      |             |   | 1,779,370  |                       |   |   | (10,585 | ) |
|                                                                                                                          |   |             |       |   |             |   |       |                       |   |   |   |   |
| Cash      flows from investing activities                                                                                     |   |             |       |   |             |   |       |                       |   |   |   |   |
| Purchases      of property and equipment                                                                                      |   |             | (136,615   | )      |             |   | (136,615   | )                          |   |   | - |   |
|                                                                                                                          |   |             |       |   |             |   |       |                       |   |   |   |   |
| Cash      flows from financing activities                                                                                     |   |             |       |   |             |   |       |                       |   |   |   |   |
| Repayment      of capital leases                                                                                              |   |             | (16,922    | )      |             |   | (29,415    | )                          |   |   | (12,493 | ) |
| Proceeds      from convertible notes payable (net of $12,500 issuance    costs)                                               |   |             | 125,000    |   |             |   | 112,500    |                       |   |   | (12,500 | )  |
| Proceeds      from the sale of common stock                                                                                   |   |             | 836,855    |   |             |   | 871,230    |                       |   |   | 34,375 |   |
| Repurchase      of stock into treasury                                                                                        |   |             | (150,000   | )      |             |   | (150,000   | )                          |   |   | - |   |
| Proceeds      from the issuance of preferred stock, net of issuance                                                           |   |             |       |   |             |   |       |                       |   |   |   |   |
| costs      of $250,148 in 2007                                                                                                |   |             | 1,265,500  |   |             |   | 1,265,500  |                       |   |   | - |   |
| Principal      repayments of long-term debt                                                                                   |   |             | (42,948    | )      |             |   | (59,035    | )                          |   |   | (16,087 | ) |
| Proceeds      from loans payable - stockholders                                                                               |   |             | (1,943     | )      |             |   | (1,943     | )                          |   |   | - |   |
| Net      cash provided by financing activities                                                                                |   |             | 2,015,542  |   |             |   | 2,008,837  |                       |   |   | (6,705 | ) |
|                                                                                                                          |   |             |       |   |             |   |       |                       |   |   |   |   |
| Change      in cash                                                                                                           |   |             | 110,142    |   |             |   | 92,852     |                       |   |   | (17,290 | ) |
|                                                                                                                          |   |             |       |   |             |   |       |                       |   |   |   |   |
| Cash                                                                                                                          |   |             |       |   |             |   |       |                       |   |   |   |   |
| Beginning      of period                                                                                                      |   |             | 963        |   |             |   | 963        |                       |   |   | - |   |
| End      of period                                                                                                            |   | $                | 111,105    |   |             | $      | 93,815     |                       |   | $ | (17,290 | ) |
|                                                                                                                          |   |             |       |   |             |   |       |                       |   |   |   |   |
| The      accompanying notes to the Condensed Consolidated Financial Statements are      an integral part of these statements. |   |             |       |   |             |

----

----

----

|   | • | 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 |   |                                       |   |