UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K
 
 (Mark
One)
 
 x
                ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
fiscal year ended December 31, 2008
 
  ̈
                TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
transition period from __________________ to
__________________________.
 
 Commission
File Number: 000-52792
 
 SUSPECT DETECTION SYSTEMS
INC.
 (Exact
name of registrant as specified in its charter)
 
 Delaware
                      (State
      or other jurisdiction of incorporation)
                    98-0511645
                      (IRS
      Employer Identification
No.)
  4 Nafcha Street, Jerusalem,
Israel 95508
 (Address
of principal executive offices)
 
 +972 (2)
500-1128
 (Registrant's
telephone number, including area code)
 
 Securities
registered pursuant to Section 12(b) of the Act: None
 
 Securities
registered pursuant to section 12(g) of the Act: Common Stock, $0.0001 par
value
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes   ̈  No x
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.  Yes   ̈  No x
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes x No  ̈
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
  
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large
      accelerated filer   ̈
                  Accelerated
      filer  ̈Non-accelerated
      filer   ̈
                  Smaller
      reporting company  x(Do
      not check if a smaller reporting company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈ No x
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant, based on the last sales price quoted on NASDAQ
Over-the-Counter Bulletin Board on June 30, 2008, the last business day of
the registrant’s most recently completed second fiscal quarter, cannot be
computed as there was no reported trading on such date.
  The
number of shares of common stock issued and outstanding as of March 31, 2009,
was 65,809,668 shares.
 
 Documents
Incorporated By Reference: None
  2
  TABLE
OF CONTENTS
 
 PagePART
      I
                                                                            
                                                                            4Item
      1.
                                                                            Business
                                                                            4Item
      1A.
                                                                            Risk
      Factors
                                                                            6Item
      1B.
                                                                            Unresolved
      Staff CommentsItem
      2.
                                                                            Properties
                                                                            6Item
      3.
                                                                            Legal
      Proceedings
                                                                            6Item
      4.
                                                                            Submission
      of Matters to a Vote of Security Holders
                                                                            6PART
      II
                                                                            
                                                                            7Item
      5.
                                                                            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                                                                            7Item
      6.
                                                                            Selected
      Financial Data
                                                                            7Item
      7.
                                                                            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                                                            7Item
      7A.
                                                                            Quantitative
      and Qualitative Disclosures About Market RiskItem
      8.
                                                                            Financial
      Statements and Supplementary Data
                                                                            8Item
      9.
                                                                            Changes
      In and Disagreements With Accountants on Accounting and Financial
      Disclosure
                                                                            9Item
      9A(T).
                                                                            Controls
      and Procedures
                                                                            9Item
      9B.
                                                                            Other
      Information
                                                                            10PART
      III
                                                                            
                                                                            10Item
      10.
                                                                            Directors,
      Executive Officer and Corporate Governance
                                                                            10Item
      11.
                                                                            Executive
      Compensation
                                                                            12Item
      12.
                                                                            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                                                                            13Item
      13.
                                                                            Certain
      Relationships and Related Transactions, and Director
      Independence
                                                                            14Item
      14.
                                                                            Principal
      Accounting Fees and Services
                                                                            14PART
      IVItem
      15.
                                                                            Exhibits,
      and Financial Statement Schedules
                                                                            15SIGNATURES
                                                                            16
  3
  PART
I
 
 As used
in this Form 10-K, references to the “Company,” the “Registrant,” “we,” “our,”
or “us” refer to Suspect Detection Systems Inc., unless the context otherwise
indicates.
 
 Forward-Looking
Statements
 
 This
Annual Report on Form 10-K (this “Report”) contains forward-looking statements.
Any statements contained in this Report that are not statements of historical
fact may be deemed to be forward-looking statements. Forward-looking information
includes statements relating to future actions, prospective products, future
performance or results of current or anticipated products, sales and marketing
efforts, costs and expenses, interest rates, outcome of contingencies, financial
condition, results of operations, liquidity, business strategies, cost savings,
objectives of management, and other matters. You can identify forward-looking
statements as those that are not historical in nature, particularly those that
use terms such as “may,” “will,” “should,” “expects,” “anticipates,”
“contemplates,” “estimates,” “believes,” “plans,” or  “predicts.” The
Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for
forward-looking information to encourage companies to provide prospective
information about themselves without fear of litigation, so long as that
information is identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the
information.
 
 These
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties, and assumptions that we cannot predict. In evaluating
these forward-looking statements, you should consider various factors, including
the following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently and
operate profitable operations, and (c) whether we are able to generate
sufficient revenues or obtain financing to sustain and grow our operations. We
assume no obligation to update forward-looking statements, except as otherwise
required under the applicable federal securities laws.
 
 Item
      1.
                Business.
 
 Corporate
Background
 
 The
Registrant was incorporated under the General Corporation Law of the State of
Delaware on October 5, 2006.  Initially the Registrant focused on the
business of offering computer hardware and software products to religious
consumers, with an emphasis on ultra-orthodox Jewish communities in
Israel.  On November 14, 2007, the Registrant executed a letter of
intent with Suspect Detection Systems Ltd., an Israeli corporation (“SDS”),
providing for the acquisition of SDS by the Registrant.  Since the
execution of the letter of intent with SDS, the Registrant’s activities have
focused on the consummation of the acquisition of SDS by the
Registrant.
 
 On
December 18, 2008, the Registrant and SDS executed and delivered an investment
agreement (the “Investment
Agreement”).  Pursuant to the Investment Agreement, at closing
on January 20, 2009 SDS issued 1,218,062 ordinary shares, par value NIS 0.01 per
share, to the Registrant, representing 51% of the issued and outstanding share
capital of SDS, in consideration for (a) the sum of $280,000 paid by the
Registrant to SDS on December 22, 2008, and (b) the sum of $820,000 previously
paid by the Registrant to SDS pursuant to letter agreements dated as of October
18, 2007, November 14, 2007, January 10, 2008, May 18, 2008 and October 20,
2008.
 
 The
Investment Agreement also provides for good faith negotiations of a second
agreement (the “Second
Agreement”), following the closing of the Investment Agreement, pursuant
to which: (i) the Registrant will grant options to the shareholders of SDS to
exchange their SDS ordinary shares into shares of the Registrant’s common stock;
(ii) the Registrant will grant options to the holders of options to purchase SDS
ordinary shares to exchange such options into options to purchase shares of the
Registrant’s common stock; (iii) SDS will grant additional options, to Mr.
Shoval and certain SDS employees or consultants, to purchase new SDS ordinary
shares; and (iv) the Registrant will grant rights to Mr. Shoval and said SDS
employees or consultants to exchange all or any part of the additional SDS
options into options to purchase shares of the Registrant’s common
stock.
  4
 
 At a
special meeting of the Registrant’s shareholders on January 23, 2009, a proposal
was approved to amend the Registrant’s Certificate of Incorporation for the
purpose of changing its name from “PCMT Corporation” to “Suspect Detection
Systems Inc.”
 
 Business and History of
SDS
 
 SDS
specializes in the development and application of proprietary technologies for
law enforcement and border control, including counter terrorism efforts,
immigration control and drug enforcement, as well as human resource management,
asset management and the transportation sector.  SDS completed the
development of its “Cognito” line of products in 2007, which are based on
proprietary software and use commercially available hardware to identify
individuals that pose security threats, whether or not they are carrying a
weapon on their person or in their belongings.  Cognito systems are
comprised of a front-end test station and a back office, where multiple-station
and multiple-site data is stored, managed and distributed.  The
front-end test station serves as the point of contact with the individual being
examined.  The back-office is designed to manage and control the test
stations at a given site and it stores all test histories and traveler profiles
and interfaces with external systems and databases.  A provisional
patent application has been issued for the Cognito line of products in the
United States.  SDS is also engaged in the development of behavior
based screening technologies for the checkpoint screening market.
 
 SDS was
incorporated under the Companies Law, 5759-1999, of the State of Israel in
2004.  In order to finance its research and development activities,
SDS sought public funding and in 2005 the Transportation Security Administration
of the US Department of Homeland Security (the “TSA”) awarded a grant
to SDS to support the development of behavior pattern recognition
technology.  Additional funding was obtained from the Israeli
government and US and Israeli governmental security authorities performed
evaluations and testing of SDS’s products in 2005.  In 2006 SDS
obtained private financing, issuing shares of preferred stock and warrants to
the NG – The Northern Group LP.  Additional US government funding was
obtained in 2006 from the TSA .
 
 Marketing
 
 SDS
markets its products to local and national law enforcement and homeland security
authorities in Israel, the US, Mexico, Europe and Asia, as well as operators of
critical infrastructure in the private sector such as oil and gas companies, the
diamond industry and financial enterprises.  SDS has executed
agreements with several companies and individuals all in the framework of its
ordinary course of business , providing for assistance in the marketing of its
products and endorsements.
 
 Competition
 
 SDS has
identified a number of potential competitors, including developers of voice
stress analysis equipment designed to remotely detect a person trying to lie
during an interview, and developers of equipment designed to generate stimuli
from a remotely location that will generate enough data about an individual to
enable detection of hostile intent. Examples of  the Competitors are
as follows :
 
 WeCU
Technologies
 Nemesysco
 
 Dependence on Major
Customers
 
 Approximately
30% of SDS’s revenue in 2008 was derived from services provided to a single
customer, which is an agency of the government of Mexico.  Since the
bulk of SDS’s revenues are generated by initial sales of its systems, as opposed
ongoing support services, the loss of this customer may  have a
material adverse impact on the business of SDS.
  5
 
 Intellectual
Property
 
 The
United States Transportation Security Administration of the US Department of
Homeland Security has certain rights in the technology developed by SDS,
pursuant to a Cooperative Agreement between SDS and the TSA dated June 22,
2005.  The Cooperative Agreement relates to a $200,000 grant provided
to SDS by the TSA in 2005 for the development and adaptation for use in the US
of a prototype application designed to detect suspicious
behavior.  Pursuant to the agreement, SDS granted an irrevocable,
non-exclusive, paid-up license for US Government use of the technology
development using the grant funds.  The license requires prior
approval from SDS for any commercial use of the technology, with the exception
of use by US Government contractors under procurement contracts, grants,
cooperative agreements and other transactions awarded or entered into for US
government purposes.
 
 The
Science and Technology Directorate of the US Department of Homeland Security has
certain rights in the technology developed by SDS, pursuant to a Cooperative
Agreement between SDS and the STD dated September 29, 2006.  The
Cooperative Agreement relates to a $260,000 grant provided to SDS by the STD on
June 7, 2005 pursuant to a proposal entitled Automated Internal Threat
Detection.  In the agreement, SDS granted (i) a royalty free,
nonexclusive, irrevocable license to the US Government to use and authorize
others to use scientific, technical or other works based on or containing data
first produced under the grant, and (ii) an irrevocable, non-exclusive, paid-up
license to the US government to use registered patents development with grant
funds for or on behalf of the US government.
 
 Employees
 
 On March
31, 2009 the Registrant did not have any full time employees and SDS had 6
full time employees
 
 Item
      1A.
                Risk
      Factors.
 
 Smaller
reporting companies are not required to provide the information called for by
this Item.
 
 Item
      2.
                Description of
      Property.
 
 SDS
maintains its executive offices at 25 Bazel Street, Petach Tikva, Israel, where
it leases approximately 150 square meters of office space at a monthly rent of
approximately $8,500. The lease expires in August 2011 and the Company has an
option to renew the lease for an additional  3 years .
 
 Item
      3.
                Legal
      Proceedings.
 
 There are
no pending legal proceedings to which the Registrant or SDS are parties or
in which any director, officer or affiliate of the Registrant or SDS or any
owner of record or beneficially of more than 5% of any class of voting
securities of the Registrant or SDS is a party adverse to the Registrant or SDS
or has an  interest adverse to the Registrant or SDS. The property of
the Registrant and SDS is not the subject of any pending legal
proceedings.
 
 Item
      4.
                Submission of
      Matters to a Vote of Security
Holders.
 
 On
January 23, 2009, at a special meeting of the shareholders of the Registrant,
the shareholders approved changing the name of the company from PCMT Corporation
to Suspect Detection Systems Inc. On December 24, 2008, the Record Date, there
were 72,689,668 shares of common stock issued and outstanding. 41,335,163 shares
of the common stock were represented at the meeting in person or by proxy, which
shares constituted 56.86% of the issued and outstanding shares of common stock
as of the Record Date, and therefore a quorum was present. At the meeting, the
proposal to authorize the amendment of the Registrant’s Certificate of
Incorporation for the purpose of changing the name of the Corporation from “PCMT
Corporation” to “Suspect Detection Systems Inc.” was presented to the
shareholders. 100% of the shares represented at the meeting granted the Board of
Directors the authority to change the name of the Corporation. Accordingly the
proposal was approved.
  6
  PART
II
 
 Item
      5.
                Market for
      Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities.
 
 Although
our common stock has been eligible to be traded on the Over-The-Counter Bulletin
Board since June 6, 2007 under the ticker symbol PCMT, there have been only
limited and sporadic quotations, and there is no established trading market for
our common stock.
 
 As of
March 6, 2009, the ticker symbol was changed to SDSS as a result of the name
change of the company.
 
 As of
March 31, 2009, there were approximately 119 holders of record of our
common stock.
 
 We have
never declared or paid any cash dividends on our common stock, nor do we
anticipate paying any in the foreseeable future. Furthermore, we expect to
retain any future earnings to finance our operations and expansion. The payment
of cash dividends in the future will be at the discretion of our Board of
Directors and will depend upon our earnings levels, capital requirements, any
restrictive loan covenants, and other factors the Board considers
relevant.
 
 Securities
Authorized for Issuance under Equity Compensation Plans
 
 On
January 1 , 2009 the Registrant executed consulting agreements with Amir Uziel
and Lavi Krasney providing, among other things, for the issuance of 12,500
shares of the Registrant’s common stock to each of Messrs. Uziel and Krasney on
the last business day of each month for a period of three years, in addition to
$3,000 per month each in cash consideration.
 
 Item 6.
                Selected Financial
      Data
 
 Smaller
reporting companies are not required to provide the information called for by
this Item.
 
 Item
      7.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
 
 The
following discussion of our plan of operation should be read in conjunction with
the financial statements and related notes that appear elsewhere in this
prospectus. This discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various
factors.  All forward-looking statements speak only as of the date on
which they are made. We undertake no obligation to update such statements to
reflect events that occur or circumstances that exist after the date on which
they are made.
  Plan
of Operation
 
 As a
result of the acquisition of 51% of Suspect Detection Systems Inc Ltd. in the
beginning of the first quarter of 2009, within the next 12 months we plan to
pursue the development and marketing of SDS’s products.
 
 Results
of Operations
 
 As of the
year ended December 31, 2008, we had no revenues, similar to the year ended
December 31, 2007 where we also had no revenues.  Expenses increased
from $82,475 in the year ended December 31, 2007 to $258,615 in the year ended
December 31, 2008. This approximately 214% increase was a result of a $106,917
expense incurred as a result of shares issued for promotional services (as
compared to no such expense in 2007), an increase in legal fees from $7,400 in
the year ended December 31, 2007 to $55,288 in the year ended December 31, 2008,
travel expense increased $2,190 to $28,345 and officer’s compensation increased
from $8,000 to $20,200.
 
 For the
year ended December 31, 2008, the Registrant incurred a net loss of $251,267, as
compared to a net loss of $82,037 in the year ended December 31,
2007.  The increase in losses resulted primarily from an increase in
the expenses from December 31, 2007 to December 31, 2008. Our cumulative net
loss during the period from October 5, 2006 (inception) through December 31,
2008 was $340,511.
  7
 
 Liquidity
and Capital Resources
 
 We
estimate that we will require approximately $1 million for the next 12
months of operations.  We do not have sufficient resources to
effectuate our current business. As of December 31, 2008, we had $179,565
available in cash. We expect to incur a minimum of $1,600,000 in expenses during
the next 12 months of operations, including the following expenses:
$300,000  in research and dev elopement costs; $ 700,000 in marketing
expenses; and $600,000 in general overhead expenses such as corporate, legal and
accounting services, office overhead, and general working capital.
 
 Accordingly,
we will have to raise the funds to pay for these expenses. We may have to borrow
money from shareholders, issue debt or equity or enter into a strategic
arrangement with a third party. There can be no assurance that additional
capital will be available to us. We currently have no agreements, arrangements,
or understandings with any person to obtain funds through bank loans, lines of
credit, or any other sources. Since we have no such arrangements or plans
currently in effect, our inability to raise funds for the development and
marketing of SDS’s products will have a severe negative impact on our ability to
remain a viable company.
 
 Going
Concern Consideration
  Our
registered independent auditors have issued a going concern opinion. This means
that our auditors believe there is substantial doubt that we can continue as an
on-going business for the next 12 months. We do not anticipate that we will
generate significant revenues to fund our operations and capital requirements
for the next 12 months. Accordingly, we must raise additional capital from
sources other than our operations in order to implement our business
plan. Our registered independent auditors included an explanatory paragraph
in their report on the accompanying financial statements regarding concerns
about our ability to continue as a going concern. Our financial statements
contain additional note disclosures describing the circumstances that lead to
this disclosure by our registered independent auditors.
  Off-Balance
Sheet Arrangements
 
 None.
 Item 8.
                  Financial Statements and
      Supplementary Data
  8
 SUSPECT
DETECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 INDEX
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 
 Report
      of Registered Independent Auditors
                                
                                
                                F-2Financial
      Statements-Balance
      Sheets as of December 31, 2008, and 2007
                                
                                
                                F-3Statements
      of Operations for the Years Ended December 31, 2008, and 2007, and
      Cumulative from Inception
                                
                                
                                F-4Statement
      of Stockholders’ Equity for the Period from Inception Through December 31,
      2008F-5Statements
      of Cash Flows for Years Ended December 31, 2008,  2007, and
      Cumulative from InceptionNotes
      to Financial Statements December 31, 2008, and 2007
                                
                                
                                F-7
 
 F-1
 REPORT
OF REGISTERED INDEPENDENT AUDITORS
 
 
 
 To the
Board of Directors and Stockholders of
 Suspect
Detection Systems Inc (Formerly PCMT Corporation):
 
 We have
audited the accompanying balance sheets of Suspect Detection Systems Inc.
(formerly PCMT Corporation) (a Delaware corporation in the development stage) as
of December 31, 2008, and 2007, and the related statements of operations,
stockholders’ equity, and cash flows for the years ended December 31, 2008, and
2007, and from inception (October 5, 2006) through December 31,
2008.  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America).  Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting.  Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Suspect Detection System Inc.
(formerly PCMT Corporation) as of December 31, 2008, and 2007, and the results
of its operations and its cash flows for the years ended December 31, 2008, and
2007, and from inception (October 5, 2006) through December 31, 2008, in
conformity with accounting principles generally accepted in the United States of
America.
 
 The accompanying financial statements
have been prepared assuming that the Company will continue as a going
concern.  As discussed in Note 2 to the financial statements, the
Company is in the development stage, and has not established any source of
revenue to cover its operating costs.  As such, it has incurred an
operating loss since inception.  Further, as of December 31, 2008, the
cash resources of the Company were insufficient to meet its planned business
objectives.  These and other factors raise substantial doubt about the
Company’s ability to continue as a going concern.  Management’s plan
regarding these matters is also described in Note 2 to the financial
statements.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
 
 Respectfully
submitted,
 
 /s/ Davis
Accounting Group P.C.
 
 Cedar
City, Utah,
 March 13,
2009
 
 F-2
 SUSPECT
DETECTION SYSTEMS INC.
 (FORMERLY PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 BALANCE
SHEETS (NOTE 2)
 AS
OF DECEMBER 31, 2008, AND 2007
 
 ASSETS
                              
                              December
      31,2008
                              
                              
                              2007Current
      Assets:Cash
      in bank
                              
                              $
                              179,565
                              
                              
                              $
                              6,245Restricted
      cash
                              
                              
                              -
                              
                              
                              
                              358,289Due
      from Related Party - SDS
                              
                              
                              28,000
                              
                              
                              
                              -Prepaid
      expenses
                              
                              
                              143,392
                              
                              
                              
                              -Total
      current assets
                              
                              
                              350,957
                              
                              
                              
                              364,534Other
      Assets:Deferred
      acquisition costs
                              
                              
                              1,135,000
                              
                              
                              
                              75,500Security
      deposit
                              
                              
                              -
                              
                              
                              
                              500Total
      other assets
                              
                              
                              1,135,000
                              
                              
                              
                              76,000Total
      Assets
                              
                              $
                              1,485,957
                              
                              
                              $
                              440,534LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      Liabilities:Accounts
      payable - Trade
                              
                              $
                              807
                              
                              
                              $
                              7,400Accrued
      liabilities
                              
                              
                              7,750
                              
                              
                              
                              8,525Accrued
      officer's salary
                              
                              
                              5,000
                              
                              
                              
                              5,000Accrued
      office rent - Related party
                              
                              
                              8,052
                              
                              
                              
                              4,452Due
      to Director and stockholder
                              
                              
                              288
                              
                              
                              
                              200Total
      current liabilities
                              
                              
                              21,897
                              
                              
                              
                              25,577Total
      liabilities
                              
                              
                              21,897
                              
                              
                              
                              25,577Commitments
      and ContingenciesStockholders'
      Equity:Common
      stock, par value $0.0001 per share, 100,000,000 sharesauthorized;
      72,689,668 and 61,500,000 shares issued andoutstanding
      in 2008 and 2007, respectively
                              
                              
                              7,269
                              
                              
                              
                              6,150Additional
      paid-in capital
                              
                              
                              1,797,302
                              
                              
                              
                              119,801Common
      stock subscribed - Nil and 2,621,666 sharesin
      2008 and 2007, respectively
                              
                              
                              -
                              
                              
                              
                              393,250Less
      - Common stock subscriptions receivable
                              
                              
                              -
                              
                              
                              
                              (15,000
                              )(Deficit)
      accumulated during the development stage
                              
                              
                              (340,511
                              )
                              
                              
                              (89,244
                              )Total
      stockholders' equity
                              
                              
                              1,464,060
                              
                              
                              
                              414,957Total
      Liabilities and Stockholders' Equity
                              
                              $
                              1,485,957
                              
                              
                              $
                              440,534
 
 The
accompanying notes to the financial statements are
 an
integral part of these balance sheets.
 
 F-3
 SUSPECT
DETECTION SYSTEMS INC.
 (FORMERLY PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENTS
OF OPERATIONS (NOTE 2)
 FOR
YEARS ENDED DECEMBER 31 2008, AND 2007,
 AND
CUMULATIVE FROM INCEPTION (OCTOBER 5, 2006)
 THROUGH
DECEMBER 31, 2008
 
 Years
      Ended
                          
                          
                          CumulativeDecember
      31,
                          
                          
                          From2008
                          
                          
                          2007
                          
                          
                          InceptionRevenues
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Expenses:General
      and administrative-Promotional
      services paid by issued shares
                          
                          
                          106,917
                          
                          
                          
                          -
                          
                          
                          
                          106,917Legal
      fees
                          
                          
                          55,288
                          
                          
                          
                          7,400
                          
                          
                          
                          62,688Accounting
      and audit fees
                          
                          
                          20,000
                          
                          
                          
                          18,500
                          
                          
                          
                          42,500Travel
      expense
                          
                          
                          28,345
                          
                          
                          
                          2,190
                          
                          
                          
                          30,535Officer's
      compensation
                          
                          
                          20,200
                          
                          
                          
                          8,000
                          
                          
                          
                          28,200Transfer
      agent fees
                          
                          
                          7,149
                          
                          
                          
                          16,845
                          
                          
                          
                          23,994Consulting
      fees
                          
                          
                          5,000
                          
                          
                          
                          7,400
                          
                          
                          
                          12,400Legal
      servics paid by issued shares
                          
                          
                          -
                          
                          
                          
                          10,500
                          
                          
                          
                          10,500Filing
      fees
                          
                          
                          4,421
                          
                          
                          
                          5,151
                          
                          
                          
                          9,572Office
      rent
                          
                          
                          3,600
                          
                          
                          
                          3,600
                          
                          
                          
                          8,052Advertising
      and promotion
                          
                          
                          7,000
                          
                          
                          
                          -
                          
                          
                          
                          7,000Other
                          
                          
                          695
                          
                          
                          
                          2,889
                          
                          
                          
                          4,189Legal
      fees - Organization costs
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,500Officers'
      compensation paid by issued shares
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          250Total
      general and administrative expenses
                          
                          
                          258,615
                          
                          
                          
                          82,475
                          
                          
                          
                          348,297(Loss)
      from Operations
                          
                          
                          (258,615
                          )
                          
                          
                          (82,475
                          )
                          
                          
                          (348,297
                          )-Other
      Income
                          
                          
                          7,348
                          
                          
                          
                          438
                          
                          
                          
                          7,786Provision
      for income taxes
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      (Loss)
                          
                          $
                          (251,267
                          )
                          
                          $
                          (82,037
                          )
                          
                          $
                          (340,511
                          )(Loss)
      Per Common Share:(Loss)
      per common share - Basic and Diluted
                          
                          $
                          (0.00
                          )
                          
                          $
                          (0.00
                          )Weighted
      Average Number of Common SharesOutstanding
      - Basic and Diluted
                          
                          
                          68,874,810
                          
                          
                          
                          48,195,890
 
 The
accompanying notes to the financial statements are
 an
integral part of these statements
  F-4
 SUSPECT
DETECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENT
OF STOCKHOLDERS' EQUITY (NOTE 2)
 FOR
THE PERIOD FROM INCEPTION (OCTOBER 5, 2006)
 THROUGH
DECEMBER 31, 2008
 
 Less
      -
                        
                        
                        (Deficit)Common
                        
                        
                        AccumulatedAdditional
                        
                        
                        Common
                        
                        
                        Stock
                        
                        
                        During
      theCommon
      stock
                        
                        
                        Paid-in
                        
                        
                        Stock
                        
                        
                        Subscriptions
                        
                        
                        DevelopmentDescription
                        
                        Shares
                        
                        
                        Amount
                        
                        
                        Capital
                        
                        
                        Subscribed
                        
                        
                        Receivable
                        
                        
                        Stage
                        
                        
                        TotalBalance
      - October 5, 2006
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Common
      stock issued to officer at par value
                        
                        
                        100,000
                        
                        
                        
                        10
                        
                        
                        
                        (9
                        )
                        
                        
                        -
                        
                        
                        
                        (1
                        )
                        
                        
                        -
                        
                        
                        
                        -Common
      stock issued for officer's compensation
                        
                        
                        25,000,000
                        
                        
                        
                        2,500
                        
                        
                        
                        (2,250
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        250Common
      stock issued for cash
                        
                        
                        12,600,000
                        
                        
                        
                        1,260
                        
                        
                        
                        30,240
                        
                        
                        
                        -
                        
                        
                        
                        (11,500
                        )
                        
                        
                        -
                        
                        
                        
                        20,000Net
      (loss) for the period
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (7,207
                        )
                        
                        
                        (7,207
                        )Balance
      - December 31, 2006
                        
                        
                        37,700,000
                        
                        
                        $
                        3,770
                        
                        
                        $
                        27,981
                        
                        
                        $
                        -
                        
                        
                        $
                        (11,501
                        )
                        
                        $
                        (7,207
                        )
                        
                        $
                        13,043Payment
      of common stock subscription
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        11,501
                        
                        
                        
                        -
                        
                        
                        
                        11,501Common
      stock issued for cash
                        
                        
                        7,400,000
                        
                        
                        
                        740
                        
                        
                        
                        17,760
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        18,500Common
      stock issued for cash
                        
                        
                        16,300,000
                        
                        
                        
                        1,630
                        
                        
                        
                        63,570
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        65,200Common
      stock issued for services
                        
                        
                        100,000
                        
                        
                        
                        10
                        
                        
                        
                        10,490
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        10,500Common
      stock subscribed- 2,621,666 shares
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        393,250
                        
                        
                        
                        (15,000
                        )
                        
                        
                        -
                        
                        
                        
                        378,250Net
      (loss) for the period
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (82,037
                        )
                        
                        
                        (82,037
                        )Balance
      - December 31, 2007
                        
                        
                        61,500,000
                        
                        
                        $
                        6,150
                        
                        
                        $
                        119,801
                        
                        
                        $
                        393,250
                        
                        
                        $
                        (15,000
                        )
                        
                        $
                        (89,244
                        )
                        
                        $
                        414,957Payment
      of common stock subscription
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        15,000
                        
                        
                        
                        -
                        
                        
                        
                        15,000Common
      stock subscribed - 5,568,337 shares
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        835,250
                        
                        
                        
                        (67,000
                        )
                        
                        
                        -
                        
                        
                        
                        768,250Common
      stock issued from subscribed shares
                        
                        
                        9,523,002
                        
                        
                        
                        952
                        
                        
                        
                        1,427,668
                        
                        
                        
                        (1,228,500
                        )
                        
                        
                        67,000
                        
                        
                        
                        -
                        
                        
                        
                        267,120Common
      stock issued for services
                        
                        
                        1,666,666
                        
                        
                        
                        167
                        
                        
                        
                        249,833
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        250,000Net
      (loss) for the period
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (254,267
                        )
                        
                        
                        (254,267
                        )Balance
      - December 31, 2008
                        
                        
                        72,689,668
                        
                        
                        $
                        7,269
                        
                        
                        $
                        1,797,302
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        (343,511
                        )
                        
                        $
                        1,461,060
 
 
 The
accompanying notes to the financial statements are
 
 F-5
 SUSPECT
DETECTION SYSTEMS INC.
 (FORMERLY PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENTS
OF CASH FLOWS (NOTE 2)
 FOR
THE  YEARS ENDED DECEMBER 31, 2008, AND 2007,
 AND
CUMULATIVE FROM INCEPTION (OCTOBER 5, 2006)
 THROUGH
DECEMBER 31, 2008
 
 Year
      Ended
                        
                        
                        CumulativeYears
      Ended December 31,
                        
                        
                        From2008
                        
                        
                        2007
                        
                        
                        InceptionOperating
      Activities:Net
      (loss)
                        
                        $
                        (251,267
                        )
                        
                        $
                        (82,037
                        )
                        
                        $
                        (340,511
                        )Adjustments
      to reconcile net (loss) to net cash
                        
                        
                        -(used
      in) operating activities:
                        
                        
                        -Common
      stock issued for officers' compensation
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        250Common
      stock issued for legal services
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        10,500Common
      stock issued for promotional services
                        
                        
                        250,000
                        
                        
                        
                        -
                        
                        
                        
                        250,000Changes
      in net liabilities-
                        
                        
                        -Prepaid
      rent
                        
                        
                        -
                        
                        
                        
                        2,000
                        
                        
                        
                        -Prepaid
      expenses
                        
                        
                        (143,392
                        )
                        
                        
                        -
                        
                        
                        
                        (143,392
                        )Security
      deposit
                        
                        
                        500
                        
                        
                        
                        (500
                        )
                        
                        
                        -Accounts
      payable - Trade
                        
                        
                        (6,593
                        )
                        
                        
                        5,900
                        
                        
                        
                        807Accrued
      liabilities
                        
                        
                        (775
                        )
                        
                        
                        8,525
                        
                        
                        
                        7,750Accrued
      officer's salary
                        
                        
                        -
                        
                        
                        
                        5,000
                        
                        
                        
                        5,000Accrued
      office rent - Related party
                        
                        
                        3,600
                        
                        
                        
                        3,600
                        
                        
                        
                        8,052Net
      Cash (Used in) Operating Activities
                        
                        
                        (147,927
                        )
                        
                        
                        (57,512
                        )
                        
                        
                        (201,544
                        )Investing
      Activities:Cash
      provided by investing activities
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Net
      Cash Provided by Investing Activities
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Financing
      Activities:Issuance
      of common stock for cash
                        
                        
                        1,035,370
                        
                        
                        
                        94,200
                        
                        
                        
                        1,139,070Stock
      subscriptions paid
                        
                        
                        15,000
                        
                        
                        
                        389,751
                        
                        
                        
                        404,751Deferred
      acquisition costs
                        
                        
                        (1,059,500
                        )
                        
                        
                        (75,500
                        )
                        
                        
                        (1,135,000
                        )Due
      from Related Party - SDS
                        
                        
                        (28,000
                        )
                        
                        
                        -
                        
                        
                        
                        (28,000
                        )Due
      to Director and stockholder
                        
                        
                        88
                        
                        
                        
                        -
                        
                        
                        
                        288Net
      Cash Provided by Financing Activities
                        
                        
                        (37,042
                        )
                        
                        
                        408,451
                        
                        
                        
                        381,109Net
      Increase in Cash
                        
                        
                        (184,969
                        )
                        
                        
                        350,939
                        
                        
                        
                        179,565Cash
      - Beginning of Period
                        
                        
                        364,534
                        
                        
                        
                        13,595
                        
                        
                        
                        -Cash
      - End of Period
                        
                        $
                        179,565
                        
                        
                        $
                        364,534
                        
                        
                        $
                        179,565Cash
      - End of Period Consisting of:Cash
      in bank
                        
                        $
                        -
                        
                        
                        $
                        6,245Restricted
      cash
                        
                        
                        -
                        
                        
                        
                        358,289Total
                        
                        $
                        -
                        
                        
                        $
                        364,534Supplemental
      Disclosure of Cash Flow Information:Cash
      paid during the period for:Interest
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Income
      taxes
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
 
 On
November 3, 2006, PCMT issued 2,500,000 (post forward stock split) shares of its
common stock to its Director and Corporate Secretary at par value for services
rendered.  The transaction was valued at $250.
 
 On
December 5, 2007, PCMT issued 100,000 (post forward stock split) shares of its
common stock to an attorney for legal services rendered. The transaction was
valued at $10,500.
 
 On April
20, 2008, PCMT issued 666,6666 (post forward stock split) shares of its common
stock to a third-party for marketing and promotional services for one
year.  The transaction was valued at $100,000.
 
 On
October 1, 2008, PCMT issued 1,000,000 (post forward stock split) shares of its
common stock to a third-party for marketing and promotional services for one
year.  The transaction was valued at $150,000.
 
 The
accompanying notes to the financial statements are
 an
integral part of these statements.
  F-6
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 1)           Summary
of Significant Accounting Policies
 
 Basis of Presentation and
Organization
 
 Suspect
Detection Systems Inc. (formerly PCMT Corporation) (“SDS” or the “Company”) is a
Delaware corporation in the development stage and has not commenced
operations.  The Company was incorporated under the laws of the State
of Delaware on October 5, 2006.  The revised business plan of the
Company is the application of proprietary technologies for law enforcement and
border control, including counter terrorism efforts, immigration control and
drug enforcement, as well as human resource management, asset management and the
transportation sector.  The accompanying financial statements of SDS
were prepared from the accounts of the Company under the accrual basis of
accounting.
 
 In
November 2006, SDS began a capital formation activity through a Private
Placement Offering (“PPO #1”), exempt from registration under the Securities Act
of 1933, to raise up to $50,000 through the issuance of 20,000,000 (post
forward stock split) shares of its common stock, par value $0.0001 per share, at
an offering price of $0.0025 per share.  As of February 5, 2007, the
Company had received $50,000 in proceeds from the PPO #1.  SDS also
commenced an activity to submit a Registration Statement on Form SB-2 to the SEC
to register 20,000,000 shares (post forward stock split) of its outstanding
common stock on behalf of selling stockholders.  SDS will not receive
any of the proceeds of this registration activity once the shares of common
stock are sold.  The Registration Statement on Form SB-2 was filed
with the SEC on March 12, 2007, and declared effective on March 29,
2007.
 
 In
October 2007, SDS began a second capital formation activity through a Private
Placement Offering (“PPO #2”), exempt from registration under the Securities Act
of 1933, to raise up to $100,000 through the issuance of 25,000,000 (post
forward stock split) shares of its common stock, par value $0.0001 per share, at
an offering price of $0.004 per share.  The PPO #2 has an offering
period of 180 days.  As of November 15, 2008, the Company had
subscribed 16,300,000 (post forward stock split) shares (December 31, 2007 –
16,300,000) related to the PPO #2 to 15 foreign investors, resulting in gross
proceeds of $65,200 (December 31, 2007 - $65,200).  As of November 15,
2009, the Company declared PPO#2 closed.
 
 In
November 2007, the Company began a third capital formation activity through a
Private Placement Offering (“PPO #3”), exempt from registration under the
Securities Act of 1933, to raise up to $2,500,000 through the issuance of
16,666,666 units.  The purchase price of each unit is
$0.15.  Each unit contains one share of common stock, one warrant
giving the holder the right to purchase one share of common stock for $0.25,
which is exercisable for one year, and one warrant giving the holder the right
to purchase one share of common stock for $0.375, which is exercisable for three
years from the date of issuance.  As of November 15, 2008, the Company
had subscribed 9,523,002 (December 31, 2007 – 2,621,666) units and had received
approximately $1,428,000 (December 31, 2007 - $393,250 and subscription
receivable of $15,000) in proceeds from PPO #3.  As of November 15,
2008, the Company had issued 9,523,002 shares (post forward stock split) of
common stock subscribed and declared PPO#3 closed.
  
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 In
October 2008, SDS began a fourth capital formation activity through a Private
Placement Offering (“PPO #4), exempt from registration under the Securities Act
of 1933, to raise up to $600,000 through the issuance of Units.  Each
Unit consists of a Promissory Note and shares of common stock of the Company in
the amount of 250,000 shares for each $100,000 of principal amount of the
Promissory Note.  As of March 13, 2009, the Company had not subscribed
any shares.
 
 In
January 2009, SDS completed the Investment Agreement between SDS and Suspect
Detection Systems Ltd, an Israeli corporation (“SDS -
Israel”).  Pursuant to the Investment Agreement, SDS - Israel issued
1,218,062 ordinary shares, par value NIS 0.01 per share, representing 51 percent
of its issued and outstanding share capital to SDS as consideration for the
$280,000 paid by SDS to SDS - Israel on December 22, 2008, and $820,000
previously paid by SDS to SDS - Israel pursuant to letter agreements dated as of
October 18, 2007, November 14, 2007, January 10, 2008, May 18, 2008, and October
20, 2008.  See Note 9 for more details.
 
 Cash and Cash
Equivalents
 
 For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
 
 Revenue
Recognition
 
 The
Company is in the development stage and has yet to realize revenues from
operations.  Once SDS has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
 
 Loss per Common
Share
 
 Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the periods.  Diluted loss per share is computed
similar to basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive.  There were no dilutive financial instruments
issued or outstanding for the years ended December 31, 2008, and
2007.
 
 Income
Taxes
 
 The
Company accounts for income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes”
(“SFAS No. 109”).  Under SFAS No. 109, deferred tax assets and
liabilities are determined based on temporary differences between the bases of
certain assets and liabilities for income tax and financial reporting
purposes.  The deferred tax assets and liabilities are classified
according to the financial statement classification of the assets and
liabilities generating the differences.
  F-7
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 The
Company maintains a valuation allowance with respect to deferred tax
assets.  SDS establishes a valuation allowance based upon the
potential likelihood of realizing the deferred tax asset and taking into
consideration SDS’s financial position and results of operations for the current
period.  Future realization of the deferred tax benefit depends on the
existence of sufficient taxable income within the carryforward period under the
Federal tax laws.
 
 Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax
asset.  Any change in the valuation allowance will be included in
income in the year of the change in estimate.
 
 Fair Value of Financial
Instruments
 
 The
Company estimates the fair value of financial instruments using the available
market information and valuation methods.  Considerable judgment is
required in estimating fair value.  Accordingly, the estimates of fair
value may not be indicative of the amounts SDS could realize in a current market
exchange.  As of December 31, 2008, and 2007, the carry value of
financial instruments approximated fair value due to the short-term nature and
maturity of these instruments.
 
 Deferred Offering
Costs
 
 The
Company defers as other assets the direct incremental costs of raising capital
until such time as the offering is completed.  At the time of the
completion of the offering, the costs are charged against the capital
raised.  Should the offering be terminated, deferred offering costs
are charged to operations during the period in which the offering is
terminated.
 
 Deferred
Acquisition Costs
 
 The
Company defers as other assets the direct incremental costs of acquiring a
company until such time as the acquisition is completed.  At the time
of the completion of the acquisition, the costs are charged against the goodwill
of the acquired company.  Should the acquisition be terminated,
deferred acquisition costs are charged to operations during the period in which
the agreement is terminated.  As of December 31, 2008, and 2007, SDS
had $1,135,000 and $75,500 of deferred acquisition costs,
respectively.
 
 Concentration
of Risk
 
 As of
December 31, 2008, and 2007, the Company maintained its cash account at two
commercial banks.  The balances in the accounts are subject to FDIC
coverage of up to $250,000.
 
 Common Stock Registration
Expenses
 
 The
Company considers incremental costs and expenses related to the registration of
equity securities with the SEC, whether by contractual arrangement as of a
certain date or by demand, to be unrelated to original issuance
transactions.  As such, subsequent registration costs and expenses are
reflected in the accompanying financial statements as general and administrative
expenses, and are expensed as incurred.
  F-8
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 Lease
Obligations
 
 All
noncancellable leases with an initial term greater than one year are categorized
as either capital or operating leases.  Assets recorded under capital
leases are amortized according to the methods employed for property and
equipment or over the term of the related lease, if shorter.
 
 Estimates
 
 The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States of America.  The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of December 31, 2008, and 2007,
and expenses for the years ended December 31, 2008, and 2007, and cumulative
from inception.  Actual results could differ from those estimates made
by management.
 
 (2)           Development
Stage Activities and Going Concern
 
 The
Company is currently in the development stage, and has no
operations.  The revised business plan of the Company is the
application of proprietary technologies for law enforcement and border control,
including counter terrorism efforts, immigration control and drug enforcement,
as well as human resource management, asset management and the transportation
sector.  In January 2009, SDS completed the Investment Agreement
between SDS and Suspect Detection Systems Ltd, an Israeli corporation (“SDS -
Israel”).  Pursuant to the Investment Agreement, SDS - Israel issued
1,218,062 ordinary shares, par value NIS 0.01 per share, representing 51 percent
of its issued and outstanding share capital to SDS as consideration for the
$280,000 paid by SDS to SDS - Israel on December 22, 2008, and $820,000
previously paid by SDS to SDS - Israel pursuant to letter agreements dated as of
October 18, 2007, November 14, 2007, January 10, 2008, May 18, 2008, and October
20, 2008.  See Note 9 for more details.
 
 During
the period from inception (October 5, 2006) through December 31, 2008, the
Company was incorporated, received initial working capital through a loan from a
Director and stockholder, and commenced a capital formation activity through PPO
#1, exempt from registration under the Securities Act of 1933, to raise up to
$50,000 through the issuance of 20,000,000 (post forward stock split)
shares of its common stock, par value $0.0001 per share, at an offering price of
$0.0025 per share.  As of February 5, 2007, SDS had received $50,000
in proceeds from PPO #1.  The Company also commenced an activity to
submit a Registration Statement on Form SB-2 to the SEC to register 20,000,000
shares (post forward stock split) of common stock on behalf of selling
stockholders.  SDS will not receive any of the proceeds of this
registration activity once the shares of common stock are sold.  The
Registration Statement on Form SB-2 was filed with the SEC on March 12, 2007,
and declared effective on March 29, 2007.
  F-9
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 In
October 2007, SDS began a second capital formation activity through a Private
Placement Offering (“PPO #2”), exempt from registration under the Securities Act
of 1933, to raise up to $100,000 through the issuance of 25,000,000 (post
forward stock split) shares of its common stock, par value $0.0001 per share, at
an offering price of $0.004 per share.  The PPO #2 has an offering
period of 180 days.  As of November 15, 2008, the Company had
subscribed 16,300,000 (post forward stock split) shares (December 31, 2007 –
16,300,000) related to the PPO #2 to 15 foreign investors, resulting in gross
proceeds of $65,200 (December 31, 2007 - $65,200).  As of November 15,
2008, the Company declared PPO#2 closed.
 
 In
November 2007, the Company began a third capital formation activity through a
Private Placement Offering (“PPO #3”), exempt from registration under the
Securities Act of 1933, to raise up to $2,500,000 through the issuance of
16,666,666 units.  The purchase price of each unit is
$0.15.  Each unit contains one share of common stock, one warrant
giving the holder the right to purchase one share of common stock for $0.25,
which is exercisable for one year, and one warrant giving the holder the right
to purchase one share of common stock for $0.375, which is exercisable for three
years from the date of issuance.  As of November 15, 2008, the Company
had subscribed 9,523,002 (December 31, 2007 – 2,621,666) units and had received
approximately $1,428,000 (December 31, 2007 - $393,250 and subscription
receivable of $15,000) in proceeds from PPO #3.  As of November 15,
2008, the Company had issued 9,523,002 shares (post forward stock split) of
common stock subscribed and declared PPO#3 closed.
 
 In
October 2008, SDS began a fourth capital formation activity through a Private
Placement Offering (“PPO #4), exempt from registration under the Securities Act
of 1933, to raise up to $600,000 through the issuance of Units.  Each
Unit consists of a Promissory Note and shares of common stock of the Company in
the amount of 250,000 shares for each $100,000 of principal amount of the
Promissory Note.  As of March 13, 2009, the Company had not subscribed
any shares.
 
 The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern.  SDS has
not established any source of revenue to cover its operating costs, and as such,
has incurred an operating loss since inception.  Further, as of
December 31, 2008, the cash resources of the Company were insufficient to meet
its current business plan.  These and other factors raise substantial
doubt about SDS’s ability to continue as a going concern.  The
accompanying financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
 
 F-10
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 (3)           Loan
from Director and Stockholder
 
 As of
December 31, 2008, and 2007, a loan from an individual who is a former Director,
officer, and stockholder of the Company amounted to $288.  The loan
was provided for working capital purposes, and is unsecured, non-interest
bearing, and has no terms for repayment.
 
 (4)           Appointment
of Officers
 
 On
October 18, 2007, SDS appointed an individual as Chief Financial Officer
(“CFO”).  On October 23, 2007, an employment agreement was entered
into with the CFO.  This agreement provides that the CFO will receive
a base salary of $3,000 per quarter and $5,000 per annual audit.  This
agreement is effective until the next annual general meeting of the stockholders
of the Company or until his successor is elected or appointed.
 
 On
January 23, 2008, the Company appointed Mr. Stukalin as
Treasurer.  This office will be held by the individual until the next
annual general meeting of the stockholders of SDS or until a successor is
elected or appointed.
 
 On April
30, 2008, Mr. Bernstein resigned as the Company’s Secretary and tendered his
resignation as Director, effective May 31, 2008.
 
 Mr. Kohen
resigned as a Director of SDS and tendered his resignation as the Company’s
President, effective May 5, 2008.
 
 Mr.
Zwebner was appointed as the Company’s interim Chief Executive Officer, and was
elected as a Director of SDS.
 
 (5)           Common
Stock
 
 On
October 10, 2006, the Company issued 100,000 (post forward stock split) shares
of its common stock to its Director, president, and treasurer at par
value.  The transaction was valued at $1.
 
 On
November 3, 2006, SDS issued 25,000,000 (post forward stock split) of its common
stock to its Director and corporate secretary for services
rendered.  The transaction was valued at the par value of the common
stock, or $250.
 
 On
November 5, 2006, the Board of Directors of the Company approved PPO #1, exempt
from registration under the Securities Act of 1933, to raise up to $50,000
through the issuance of 20,000,000 (post forward stock split) shares of its
common stock, par value $0.0001 per share, at an offering price of $0.0025 per
share.  The PPO #1 had an offering period of 180 days.  As
of February 5, 2007, the Company had received cash proceeds from the PPO #1
amounting to $50,000 related to the issuance of 20,000,000 (post forward stock
split) shares of common stock.
  F-11
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 The
Company also commenced an activity to submit a Registration Statement on Form
SB-2 to the SEC to register 20,000,000 shares (post forward stock split) of
common stock on behalf of selling stockholders.  SDS will not receive
any of the proceeds of this registration activity once the shares of common
stock are sold.  The Registration Statement on Form SB-2 was filed
with the SEC on March 12, 2007, and declared effective on March 29,
2007.
 
 In
October 2007, SDS began a second capital formation activity through a Private
Placement Offering (“PPO #2”), exempt from registration under the Securities Act
of 1933, to raise up to $100,000 through the issuance of 25,000,000 (post
forward stock split) shares of its common stock, par value $0.0001 per share, at
an offering price of $0.004 per share.  The PPO #2 has an offering
period of 180 days.  As of November 15, 2008, the Company had
subscribed 16,300,000 (post forward stock split) shares (December 31, 2007 –
16,300,000) related to the PPO #2 to 15 foreign investors, resulting in gross
proceeds of $65,200 (December 31, 2007 - $65,200).  As of November 15,
2008, the Company declared PPO#2 closed.
 
 In
November 2007, the Company began a third capital formation activity through a
Private Placement Offering (“PPO #3”), exempt from registration under the
Securities Act of 1933, to raise up to $2,500,000 through the issuance of
16,666,666 units.  The purchase price of each unit is
$0.15.  Each unit contains one share of common stock, one warrant
giving the holder the right to purchase one share of common stock for $0.25,
which is exercisable for one year, and one warrant giving the holder the right
to purchase one share of common stock for $0.375, which is exercisable for three
years from the date of issuance.  As of November 15, 2008, the Company
had subscribed 9,523,002 (December 31, 2007 – 2,621,666) units and had received
approximately $1,428,000 (December 31, 2007 - $393,250 and subscription
receivable of $15,000) in proceeds from PPO #3.  As of November 15,
2008, the Company had issued 9,523,000 shares (post forward stock split) of
common stock subscribed and declared PPO#3 closed.
 
 On
November 14, 2007, the Company notified the NASD of its intention to implement a
10-for-1 forward stock split of its issued and outstanding common stock to the
holders of record as of November 23, 2007.  Such forward stock split
was effective as of November 26, 2007.  The accompanying financial
statements and related notes thereto have been adjusted accordingly to reflect
this forward stock split.
 
 On
December 5, 2007, the Company entered into a written commitment with a
third-party attorney to provide legal services and assistance with required SEC
filings.  As part of this agreement, SDS issued to the attorney
100,000 shares (post forward stock split) of common stock on said date valued at
$10,500.
 
 On April
20, 2008, SDS entered into a written agreement with an unrelated third-party
consulting company to provide advisory services for corporate development,
acquisitions, and management assistance for one year.  As payment for
the consultant’s services, the Company issued 666,666 shares (post forward stock
split) of its unregistered common stock on said date valued at
$100,000.
 
 F-12
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 On
October 1, 2008, SDS entered into a written agreement with an unrelated
third-party consultant to provide advisory services for corporate development,
acquisitions, and management assistance for one year.  As payment for
the consultant’s services, the Company issued 1,000,000 shares (post forward
stock split) of its unregistered common stock on said date valued at
$150,000.
 
 In
October 2008, SDS began a fourth capital formation activity through a Private
Placement Offering (“PPO #4), exempt from registration under the Securities Act
of 1933, to raise up to $600,000 through the issuance of Units.  Each
Unit consists of a Promissory Note and shares of common stock of the Company in
the amount of 250,000 shares for each $100,000 of principal amount of the
Promissory Note.  As of March 13, 2009, the Company had not subscribed
any shares.
 
 (6)           Income
Taxes
 
 The
provision (benefit) for income taxes for the year ended December 31, 2008, and
2007 was as follows (assuming a 23 percent effective tax rate):
 
 Year
      EndedDecember
      31,2008
                        
                        
                        2007Current
      Tax Provision:Federal
      and state-Taxable
      income
                        
                        $
                        -
                        
                        
                        $
                        -Total
      current tax provision
                        
                        $
                        -
                        
                        
                        $
                        -Deferred
      Tax Provision:Federal
      and state-Loss
      carryforwards
                        
                        $
                        57,792
                        
                        
                        $
                        18,868Change
      in valuation allowance
                        
                        
                        (57,792
                        )
                        
                        
                        (18,868
                        )Total
      deferred tax provision
                        
                        $
                        -
                        
                        
                        $
                        -
 
 SDS had
deferred income tax assets as of December 31, 2008, and 2007, as
follows:
 
 As
      ofDecember
      31,2008
                        
                        
                        2007Loss
      carryforwards
                        
                        $
                        78,318
                        
                        
                        $
                        20,526Less
      - Valuation allowance
                        
                        
                        (78,318
                        )
                        
                        
                        (20,526
                        )Total
      net deferred tax assets
                        
                        $
                        -
                        
                        
                        $
                        -
 
 F-13
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 The
Company provided a valuation allowance equal to the deferred income tax assets
for the year ended December 31, 2008, and 2007, because it is not presently
known whether future taxable income will be sufficient to utilize the loss
carryforwards.
 
 As of
December 31, 2008, and 2007, the Company had approximately $340,511 and
$89,244in tax loss carryforwards that can be utilized in future periods to
reduce taxable income, and expire in the year 2029.
 
 (7)           Related
Party Transactions
 
 As
described in Note 3, as of December 31, 2008, and 2007, SDS owed $288 to an
individual who is a former Director, president, and treasurer of SDS, and
current stockholder of SDS.
 
 As
described in Note 5, the Company has issued 100,000 shares (post forward stock
split) of its common stock to its Director, president, and treasurer at par
value.  The transaction was valued at $1.
 
 As
described in Note 5, SDS has entered into a transaction with an officer and
Director of the Company for his services, and has issued a total of 25,000,000
shares (post forward stock split) of its common stock at a value of
$250.
 
 Effective
October 5, 2006, SDS entered into a verbal agreement with an individual who is a
former Director, president, and treasurer of SDS, and current stockholder of the
Company, to lease 250 square feet of office space for operations in Jerusalem,
Israel.  The monthly lease rental amount is $300, and the term of the
lease arrangement is month-to-month.  As of December 31, 2008, and
2007, SDS had accrued $8,052 and $4,452, respectively, in office rent expense
related to the lease.
 
 As
described in Note 4, on October 23, 2007, SDS entered into an employment
agreement with the CFO.  This agreement provides that the CFO will
receive a base salary of $3,000 per quarter and $5,000 per annual
audit.  This agreement is effective until the next annual general
meeting of the stockholders of the Company or until his successor is elected or
appointed.  During the years ended December 31, 2008, and 2007, SDS
has recognized $20,200 and $8,000, respectively in officer’s compensation
expense.
 
 (8)           Commitments
 
 As
discussed in Note 7, the Company entered into a verbal agreement for the lease
of office space on a month-to-month basis with an individual who is a former
Director and officer of the Company and a current stockholder.  The
monthly lease amount is $300.
 
 As
discussed in Note 4, on October 18, 2007, SDS appointed an individual as
CFO.  On October 23, 2007, an employment agreement was entered into
with the CFO.  This agreement provides that the CFO will receive a
base salary of $3,000 per calendar quarter and $5,000 per annual
audit.  The employment agreement is effective until the next annual
general meeting of the stockholders of the Company or until his successor is
elected or appointed.
  F-14
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 As
discussed in Note 5, on December 5, 2007, the Company entered into a written
commitment with a third-party attorney to provide legal services and assistance
with required SEC filings.  Legal services under the arrangement
principally commenced during the period ended December 31, 2007.  The
attorney will receive $3,000 per month and miscellaneous reimbursement of
expenses incurred on SDS’s behalf.
 
 On March
15, 2008, SDS entered into a written commitment with a third-party consultant to
provide marketing and promotional assistance for up to 50 hours per month,
beginning April 2008.  In return for these services, the consultant
will receive a monthly service fee of $7,000, a stock option for purchasing
100,000 shares of common stock at $0.15 per share, and an annual
performance-based bonus at the discretion of SDS.  In May 2008, this
agreement was put on hold.  As of December 31, 2008, the options were
not issued and may not be issued in the future depending on the resolution of
the agreement.
 
 As
described in Note 5, on April 20, 2008, SDS entered into a written agreement
with an unrelated third-party consulting company to provide advisory services
for corporate development, acquisitions, and management assistance for one
year.  As payment for the consultant’s services, the Company issued
666,666 shares (post forward stock split) of its unregistered common stock on
said date valued at $100,000.
 
 As
described in Note 5, on October 31, 2008, SDS entered into a written agreement
with an unrelated third-party consultant to provide advisory services for
corporate development, acquisitions, and management assistance for one
year.  As payment for the consultant’s services, the Company issued
1,000,000 shares (post forward stock split) of its unregistered common stock on
said date valued at $150,000.
 
 On
January 20, 2009, an employment agreement was entered into between SDS - Israel
and its Chief Executive Officer (CEO).  This agreement provides that
the CEO will receive a base salary of NIS 63,000 per month, plus monthly
contributions by SDS - Israel of an aggregate of 20.84 percent of the base
salary towards the cost of the CEO’s life insurance, pension savings, disability
insurance, severance compensation fund, and professional
education.  SDS has agreed to guarantee the performance by Suspect
Detection Systems, Ltd. of all its obligations under the employment
agreement.
 
 (9)           Business
Combination
 
 On
October 18, 2007, SDS entered into a Letter Agreement with Suspect Detection
Systems Ltd., an Israeli Corporation (“SDS - Israel”).  The Letter
Agreement allows the Company to conduct a due diligence review of SDS - Israel
and its technology for the purpose of entering into a future business
combination transaction on terms and conditions to be negotiated.  As
part of the Letter Agreement, SDS committed to raise $1,500,000 and agreed to
advance proceeds of $60,000 to SDS - Israel.  As of December 31, 2007,
SDS had paid SDS - Israel $60,000.  In January 2008, SDS and SDS -
Israel amended the Letter Agreement such that the Company agreed to advance SDS
- Israel an additional $30,000 each month commencing January 2008 until the
consummation or termination of the Letter Agreement.  The amount of
$60,000 previously paid by SDS to SDS - Israel as well as each monthly payment
of $30,000 will reduce the $1,500,000 which SDS has committed to
raise.  In May 2008, SDS and SDS - Israel again amended the Letter
Agreement such that the Company agreed to advance SDS - Israel $80,000 each
month commencing May 2008 until the consummation or termination of the Letter
Agreement.  In August 2008, SDS and SDS - Israel again amended the
Letter Agreement such that the Company agreed to advance SDS - Israel $100,000
each month commencing August 2008 until the consummation or termination of the
Letter Agreement.  In December 2008, SDS and SDS - Israel entered into
an Investment Agreement and the Company agreed to advance SDS - Israel an
additional $280,000 and SDS - Israel shall issue to SDS 1,218,062 shares of SDS
– Israel’s capital stock, par value NIS 0.01 per share, which will represent 51
percent of the issued and outstanding share capital of SDS -
Israel.  As of December 31, 2008, SDS had paid SDS - Israel a
cumulative total of $1,100,000.
  F-15
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 On
November 14, 2007, the Company entered into a Letter of Intent with SDS -
Israel, pursuant to which SDS intends to acquire all of the issued and
outstanding capital stock of SDS - Israel.  In consideration thereof,
SDS will issue to the stockholders of SDS - Israel no less than 28,600,000 (post
forward stock split) shares of SDS’s common stock, or such number of shares of
SDS’s common stock representing not less than 31 percent of SDS’s issued and
outstanding shares of common stock at the time of closing.  The
closing of the transaction will take place after SDS has raised a minimum of
$500,000 from PPO #3.  SDS has also agreed to pay up to $20,000 in
accounting fees to obtain Israel Tax Authority approval of the transaction, and
up to $15,000 in legal fees.  As of December 31, 2008, SDS had paid
$15,000 (2007 - $8,000) in legal fees, and $20,000 (2007 - $8,000) in accounting
fees in addition to the $1,100,000 (2007 - $60,000) described above for a total
$1,135,000 (2007 - $75,500).  During the year ended December 31, 2008,
the Company paid $15,000 and $32,500 on behalf of SDS - Israel for additional
accounting and legal expenses, respectively.  As of December 31, 2008,
the Company reflected a receivable in the accompanying financial statements in
the amount of $28,000 related to the accounting and legal fees paid on behalf of
SDS - Israel.
 
 On April
30, 2008, the Company entered into a Share Exchange Agreement (the “Exchange
Agreement”) between SDS and SDS - Israel.  Pursuant to the
Exchange Agreement, SDS will acquire on the closing date of the agreement
100 percent of the outstanding capital stock of SDS - Israel (1,170,295 shares),
in exchange for 21,768,032 newly issued shares of its common stock, and options
to purchase 6,831,968 shares of its common stock at an exercise price of $0.0001
per share at any time on or before the 10th anniversary of issuance of SDS’s
options.  The parties agreed that the fair value of the transaction
was $4,290,000.  On the closing date of the Agreement, SDS - Israel
will become a wholly owned subsidiary of SDS.  As a result of the
Agreement, the stockholders of SDS - Israel will become the beneficial owners of
approximately 31 percent of SDS’s outstanding common stock on the closing date
of the Agreement.  On December 18, 2008, the Company and SDS - Israel
entered into a Termination Agreement and terminated the Agreement, effective
immediately.
  F-16
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 On
January 20, 2009, SDS and SDS - Israel completed the transactions under the
Exchange Agreement.  At closing, SDS - Israel issued 1,218,062
ordinary shares, par value NIS 0.01 per share, representing 51 percent of its
issued and outstanding share capital to SDS, as consideration for $280,000 paid
by SDS to SDS - Israel on December 22, 2008, and $820,000 previously paid by SDS
to SDS - Israel pursuant to the letter agreements dated October 18, 2007,
November 14, 2007, January 10, 2008, May 18, 2008, and October 20,
2008.
 
 SDS -
Israel was incorporated under the Companies Law, 5759-1999, of the State of
Israel in 2004.  SDS specializes in the development and application of
proprietary technologies for law enforcement and border control, including
counter terrorism efforts, immigration control and drug enforcement, as well as
human resource management, asset management and the transportation
sector.  SDS – Israel completed the development of its “Cognito” line
of products in 2007, which are based on proprietary software and use
commercially available hardware to identify individuals that pose security
threats, whether or not they are carrying a weapon on their person or in their
belongings.  Cognito systems are comprised of a front-end test station
and a back office, where multiple-station and multiple-site data is stored,
managed and distributed.  The front-end test station serves as the
point of contact with the individual being examined.  The back-office
is designed to manage and control the test stations at a given site and it
stores all test histories and traveler profiles and interfaces with external
systems and databases.  A provisional patent application has been
issued for the Cognito line of products in the United States.  SDS –
Israel is also engaged in the development of behavior based screening
technologies for the checkpoint screening market.
 
 (10)           Recent
Accounting Pronouncements
  In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115” (“SFAS No. 159”), which permits entities to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value.  An entity would report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date.  The objective
is to improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions.  The decision about whether to elect the fair value option
is applied instrument by instrument, with a few exceptions; the decision is
irrevocable; and it is applied only to entire instruments and not to portions of
instruments.  SFAS No. 159 requires disclosures that facilitate
comparisons (a) between entities that choose different measurement attributes
for similar assets and liabilities and (b) between assets and liabilities in the
financial statements of an entity that selects different measurement attributes
for similar assets and liabilities.  SFAS No. 159 is effective for
financial statements issued for fiscal years beginning after November 15,
2007.  Early adoption is permitted as of the beginning of a fiscal
year, provided the entity also elects to apply the provisions of SFAS No.
157.  Upon implementation, an entity shall report the effect of the
first re-measurement to fair value as a cumulative-effect adjustment to the
opening balance of retained earnings.  Since the provisions of SFAS
No. 159 are applied prospectively, any potential impact will depend on the
instruments selected for fair value measurement at the time of
implementation.  The management of SDS does not believe that this new
pronouncement will have a material impact on its financial
statements.
  F-17
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations – Revised
2007” (“SFAS No. 141R”), which replaces FASB Statement No. 141, “Business
Combinations.”  SFAS No. 141Restablishes principles
and requirements intending to improve the relevance, representational
faithfulness, and comparability of information that a reporting entity provides
in its financial reports about a business combination and its
effects.  This is accomplished through requiring the acquirer to
recognize assets acquired and liabilities assumed arising from contractual
contingencies as of the acquisition date, measured at their acquisition-date
fair values.  This includes contractual contingencies only if it is
more likely than not that they meet the definition of an asset of a liability in
FASB Concepts Statement No. 6, “Elements of Financial
Statements – a
replacement of FASB Concepts Statement No. 3.”This statement also
requires the acquirer to recognize goodwill as of the acquisition date, measured
as a residual.  However, this statement improves the way in which an
acquirer’s obligations to make payments conditioned on the outcome of future
events are recognized and measured, which in turn improves the measure of
goodwill.  This statement also defines a bargain purchases as a
business combination in which the total acquisition-date fair value of the
consideration transferred plus any noncontrolling interest in the acquiree, and
it requires the acquirer to recognize that excess in earnings as a gain
attributable to the acquirer.  This, therefore, improves the
representational faithfulness and completeness of the information provided about
both the acquirer’s earnings during the period in which it makes a bargain
purchase and the measures of the assets acquired in the bargain
purchase.  SDS does not expect the adoption of this pronouncement to
have a material impact on its financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS
No. 160”),which
establishes accounting and reporting standards to improve the relevance,
comparability, and transparency of financial information in its consolidated
financial statements.  This is accomplished by requiring all entities,
except not-for-profit organizations, that prepare consolidated financial
statements to (a) clearly identify, label, and present ownership interests in
subsidiaries held by parties other than the parent in the consolidated statement
of financial position within equity, but separate from the parent’s equity; (b)
clearly identify and present both the parent’s and the noncontrolling interest’s
attributable consolidated net income on the face of the consolidated statement
of income; (c) consistently account for changes in parent’s ownership interest
while the parent retains it controlling financial interest in subsidiary and for
all transactions that are economically similar to be accounted for similarly;
(d) measure of any gain, loss, or retained noncontrolling equity at fair value
after a subsidiary is deconsolidated; and (e) provide sufficient disclosures
that clearly identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners. This Statement also clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements.  SFAS No. 160 is effective for fiscal years and
interim periods on or after December 15, 2008.  The management of SDS
does not expect the adoption of this pronouncement to have a material impact on
its financial statements.
  F-18
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 In March
2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement 133”
(“SFAS No. 161”).  SFAS No. 161 enhances required disclosures
regarding derivatives and hedging activities, including enhanced disclosures
regarding how:  (a) an entity uses derivative instruments; (b)
derivative instruments and related hedged items are accounted for under SFAS No.
133, “Accounting for
Derivative Instruments and Hedging Activities”; and (c) derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.  Specifically, SFAS No. 161
requires:
 
 ▪
                    Disclosure
      of the objectives for using derivative instruments be disclosed in terms
      of underlying risk and accounting
designation;
 ▪
                    Disclosure
      of the fair values of derivative instruments and their gains and losses in
      a tabular format;
 ▪
                    Disclosure
      of information about credit-risk-related contingent features;
      and
 ▪
                    Cross-reference
      from the derivative footnote to other footnotes in which
      derivative-related information is
disclosed.
 
 SFAS No.
161 is effective for fiscal years and interim periods beginning after November
15, 2008.  Earlier application is encouraged.  The
management of SDS does not expect the adoption of this pronouncement to have a
material impact on its financial statements.
 
 In May
2008, the FASB issued FASB Statement No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”).  SFAS No. 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States of America.  The
sources of accounting principles that are generally accepted are categorized in
descending order as follows:
 
 a)
                    FASB
      Statements of Financial Accounting Standards and Interpretations, FASB
      Statement 133 Implementation Issues, FASB Staff Positions, and American
      Institute of Certified Public Accountants (AICPA) Accounting Research
      Bulletins and Accounting Principles Board Opinions that are not superseded
      by actions of the FASB.
 
 b)
                    FASB
      Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and
      Accounting Guides and Statements of
Position.
 
 c)
                    AICPA
      Accounting Standards Executive Committee Practice Bulletins that have been
      cleared by the FASB, consensus positions of the FASB Emerging Issues Task
      Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts
      (EITF D-Topics).
 
 d)
                    Implementation
      guides (Q&As) published by the FASB staff, AICPA Accounting
      Interpretations, AICPA Industry Audit and Accounting Guides and Statements
      of Position not cleared by the FASB, and practices that are widely
      recognized and prevalent either generally or in the
    industry.
  F-19
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 On May
26, 2008, the FASB issued FASB Statement No. 163, “Accounting for Financial Guarantee
Insurance Contracts” (“SFAS No. 163”).  SFAS No. 163 clarifies
how FASB Statement No. 60, “Accounting and Reporting by
Insurance Enterprises” (“SFAS No. 60”), applies to financial guarantee
insurance contracts issued by insurance enterprises, including the recognition
and measurement of premium revenue and claim liabilities.  It also
requires expanded disclosures about financial guarantee insurance
contracts.
 
 The
accounting and disclosure requirements of SFAS No. 163 are intended to improve
the comparability and quality of information provided to users of financial
statements by creating consistency.  Diversity exists in practice in
accounting for financial guarantee insurance contracts by insurance enterprises
under SFAS No. 60, “Accounting
and Reporting by Insurance Enterprises.”  That diversity
results in inconsistencies in the recognition and measurement of claim
liabilities because of differing views about when a loss has been incurred under
FASB Statement No. 5, “Accounting for Contingencies”
(“SFAS No. 5”).  SFAS No. 163 requires that an insurance enterprise
recognize a claim liability prior to an event of default when there is evidence
that credit deterioration has occurred in an insured financial
obligation.  It also requires disclosure about (a) the risk-management
activities used by an insurance enterprise to evaluate credit deterioration in
its insured financial obligations and (b) the insurance enterprise’s
surveillance or watch list.
 
 SFAS No.
163 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and all interim periods within those fiscal years,
except for disclosures about the insurance enterprise’s risk-management
activities.  Disclosures about the insurance enterprise’s
risk-management activities are effective the first period beginning after
issuance of SFAS No. 163.  Except for those disclosures, earlier
application is not permitted.  Management of SDS does not expect the
adoption of this pronouncement to have material impact on its financial
statements.
 
 (11)           Subsequent
Events
 
 On
January 20, 2009, an employment agreement was entered into between SDS - Israel
and its Chief Executive Officer (“CEO”).  This agreement provides that
the CEO will receive a base salary of NIS 63,000 per month, plus monthly
contributions by SDS - Israel of an aggregate of 20.84 percent of the base
salary towards the cost of the CEO’s life insurance, pension savings, disability
insurance, severance compensation fund, and professional
education.  SDS has agreed to guarantee the performance by SDS -
Israel of all its obligations under the employment agreement.
 
 On
December 24, 2008, SDS’s shareholders resolved to change its name from PCMT
Corporation to Suspect Detection Systems Inc.  On January 27, 2009,
the Company filed with the Secretary of State of Delaware an amendment to its
Certificate of Incorporation to reflect the change.
 
 On
January 20, 2009, the Exchange Agreement between SDS and SDS - Israel was
completed.  At closing, SDS - Israel issued 1,218,062 shares of its
capital stock, par value NIS 0.01 per share, representing 51 percent of its
issued and outstanding share capital to SDS in consideration of $280,000 paid
pursuant to the Investment Agreement dated December 18, 2008, and $820,000 paid
pursuant to letter agreements dated as of October 18, 2007, November 14, 2007,
January 10, 2008, May 18, 2008, an October 20, 2008.   Pursuant
to the Exchange Agreement, the former secretary and Director of SDS returned and
cancelled 7,000,000 shares of SDS’s common stock.
  F-20
 SUSPECT
DECTECTION SYSTEMS INC.
 (FORMERLY
PCMT CORPORATION)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008, AND 2007
 
 On
January 20, 2009, the Investment Agreement between SDS and SDS - Israel were
completed.  At closing, SDS - Israel issued 1,218,062 shares, par
value NIS 0.01 per share, representing 51 percent of its issued and outstanding
share capital to SDS in consideration of $280,000 paid pursuant to the
Investment Agreement dated December 18, 2008, and $820,000 paid pursuant to
letter agreements dated as of October 18, 2007, November 14, 2007, January 10,
2008, May 18, 2008, an October 20, 2008.
 
 Pursuant
to the Investment Agreement, former secretary and Director of SDS returned and
cancelled 7,000,000 shares of SDS’s common stock outstanding.
   F-21
  Item
      9.
                Changes In and
      Disagreements With Accountants on Accounting and Financial
      Disclosure
 
 None.
 
 Item
      9A(T).
                Controls
      and Procedures
 
 Disclosure
Controls and Procedures
 
 Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we evaluated the effectiveness of
our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934) as of December 31, 2008. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer has concluded that our disclosure
controls and procedures were effective, as of December 31, 2008, to ensure
that information we are required to disclose in reports that we file or submit
under the Exchange Act (i) is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission’s
rules and forms, and (ii) is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required
disclosure.
  9
  Internal
Control Over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934). Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with policies or
procedures may deteriorate.
  Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an assessment of the
effectiveness of our internal control over financial reporting as of December
31, 2008. In making this assessment, our management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control - Integrated Framework, as supplemented by the COSO
publication, Internal Control over Financial Reporting - Guidance for Smaller
Public Companies. Based on this evaluation, our management concluded that our
internal control over financial reporting was effective as of December 31, 2008
based on these criteria.
  This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission  that permit us to provide only
management’s report in this annual report.
 
 LACK
OF SEGREGATION OF DUTIES
  Management
is aware that there is a lack of segregation of duties at the Company due to the
fact that there is only one person dealing with general administrative and
financial matters. However, at this time management has decided that considering
the ability of the employee now involved and the quantity of transactions, the
risks associated with such lack of segregation are low and the potential
benefits of adding employees to clearly segregate duties do not justify the
substantial expenses associated with such increases. Management will
periodically reevaluate this situation.
 
 Item
9B. Other
Information
 
 None.
 
 PART
III
 
 Item
      10.
                Directors,
      Executive Officers and Corporate
  Governance
 
 Our
Directors and executive officers are:
  Name
                      
                      Age
                      
                      PositionAsher
      Zwebner
                      
                      44
                      
                      Interim
      Chief Executive Officer, Chief Financial Officer and
    DirectorShabtai
      Shoval
                      
                      47
                      
                      Chief
      Executive Officer of SDSEran
      Druckman
                      
                      47
                      
                      President
      of SDS
  10





The
business address of our directors and officers is c/o Suspect Detection Systems
Ltd., 25 Bazel Street, Petach Tikva, Israel.  Our Directors hold
office until the next annual meeting of shareholders or until their successor is
duly elected and qualified.  Our executive officers are appointed by
our Board of Directors and hold office until removed by the
Board.  Set forth below is a summary description of the principal
occupation and business experience, during the past five years, of our sole
director, who also serves as our interim chief executive officer and our chief
financial officer, and of the chief executive officer and the president of
SDS.





During
the past five years none of our officers and directors has been involved in any
legal proceedings that are material to an evaluation of their ability or
integrity as director or an executive officer of the Registrant, and none of
them have been affiliated with any company that been involved in bankruptcy
proceedings.





Asher
Zwebner has served as our Chief Financial Officer since October 18, 2007, and,
since April 30, 2008, he has also served as our interim chief executive officer
and our sole director.  Since July 17, 2008, Mr. Zwebner has served as
a director of PowerRaise Inc., a Nevada corporation that is engaged in the
development of Internet telephony applications.  Since January 1,
2007, Mr. Zwebner has served as the chief financial officer of SinoBiomed Inc.,
a Delaware corporation that is engaged in the Chinese biopharmaceutical
industry, and from November 2004 until October 2006 Mr. Zwebner served as a
director of SinoBiomed. Since May 2002 Mr. Zwebner has also served as the chief
financial officer of ForexManage Ltd., a private hi-tech developer of
Internet-based foreign exchange and risk management solutions based in Israel.
From 1995 through 2000 Mr. Zwebner was a senior manager at Kost Forer &
Gabbay (a member of Ernst and Young Global). Mr. Zwebner is a certified public
accountant in Israel and in the United States, and received a bachelor's degree
in accounting and finance from Touro College in 1988.





Shabtai
Shoval is a founder of SDS and has served as its chief executive officer since
its inception in April 2004.  Mr. Shabtai was a founder of SDS and he
has over 15 years of experience as a senior executive in the electronics and
telecommunications industries.  From October 1999 to March 2004 Mr.
Shoval served as the chief executive officer of the TVGate division of Comverse
Technology, Inc., a developer of software and related services for multimedia
communication and information processing applications.  From October
1995 to October 1998 Mr. Shoval served as vice president of Telrad Holdings
Ltd., a subsidiary of Koor Industries Ltd.  Mr. Shoval has also served
as the president of the Israeli Cable TV Association and as a director of
numerous privately held companies involved in the electronics and
telecommunications industries, including Exalink Ltd. and Algorithmic Research
Ltd.  In 1992 Mr. Shoval served as a special adviser in the office of
the prime minister of Israel.





Eran
Druckman is a founder of SDS and has served as its president since its inception
in April 2004. Mr. Druckman has over eight years of senior management experience
in the electronics, telecommunications and security services
industries.  Mr. Druckman served as a vice-president for sales at Nice
Systems Intelligence Solutions, a division of Nice Systems Ltd. (NASDAQ: NICE)
from 2004 to 2008, and a vice-president for sales and marketing at the TVGate
division of Comverse Technology, Inc., a developer of software and related
services for multimedia communication and information processing applications
from 2000 to 2004.




There are
no agreements with respect to the election of our Directors. We have not
compensated our Directors for service on our Board of Directors or reimbursed
them for expenses incurred for attendance at meetings of our Board of Directors.
Officers are appointed annually by our Board of Directors and each officer
serves at the discretion of our Board of Directors. Our Board of Directors may
in the future determine to pay Directors’ fees and reimburse Directors for
expenses related to their activities.





Code
of Ethics





We do not
currently have a Code of Ethics applicable to our principal executive, financial
and accounting officers because of the financial constraints.  The Board of
Directors intends to approve a code of ethics in 2009.




11


Audit
Committee




We do not
presently have a separately constituted audit committee or an audit committee
financial expert.  Our entire Board of Directors acts as our audit
committee.




Item
      10.
            Executive
      Compensation





To date,
none of our executive officers or directors have received or earned any
compensation or bonus for services rendered, with the exception of (i) the
compensation paid to our chief financial officer, Asher Zwebner, pursuant to his
employment agreement dated October 23, 2007, which is described in more detail
below, (ii) 25,000,000 shares of Common Stock that were issued to our former
secretary and director, Yosef Nachum Benstein, on November 6, 2006 as
compensation for expenses and services valued at $250, and (iii) 100,000 shares
of Common Stock that were issued to our former president, treasurer and
director, Nachman Shlomo Cohen, on October 10, 2006.  We do not
maintain key-man life insurance for any of our executive officers or
directors.





SUMMARY
      COMPENSATION TABLE


Name
                                                                                      and
                                                                                      principal
                                                                                      position
                                                                                    
                                                                                    Year
                                                                                    
                                                                                    Salary
                                                                                    
                                                                                    
                                                                                    Bonus
                                                                                    
                                                                                    
                                                                                    Stock
                                                                                      Awards
                                                                                    
                                                                                    
                                                                                    Option
                                                                                      Awards
                                                                                    
                                                                                    
                                                                                    Non-Equity
                                                                                      Incentive
                                                                                      Plan
                                                                                      Compensation
                                                                                    
                                                                                    
                                                                                    Nonqualified
                                                                                      Deferred
                                                                                      Compensation
                                                                                      Earnings
                                                                                    
                                                                                    
                                                                                    All
      Other
                                                                                      Compensation
                                                                                    
                                                                                    
                                                                                    TotalAsher
      Zwebner,
                                                                                    
                                                                                    2007
                                                                                    
                                                                                    $
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $Interim
      CEO and CFO
                                                                                    
                                                                                    2008
                                                                                    
                                                                                    $
                                                                                    15,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    
                                                                                    0
                                                                                    
                                                                                    
                                                                                    $
                                                                                    15,000Shabtai
      Shoval
                                                                                    
                                                                                    20072008Eran
      Druckman
                                                                                    
                                                                                    20072008





Option/SAR
Grants




We do not
currently have a stock option plan. No individual grants of stock options,
whether or not in tandem with stock appreciation rights known as SARs or
freestanding SARs have been made to any executive officer or any Director since
our inception; accordingly, no stock options have been granted or exercised by
any of the officers or Directors since we were founded.




Long-Term
Incentive Plans and Awards




We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance. No individual grants or agreements regarding
future payouts under non-stock price-based plans have been made to any executive
officer or any Director or any employee or consultant since our inception;
accordingly, no future payouts under non-stock price-based plans or agreements
have been granted or entered into or exercised by any of the officers or
Directors or employees or consultants since we were founded.




12




Employment
Contracts, Termination of Employment, Change-in-Control
Arrangements




We
executed an employment agreement with our chief financial officer, Asher
Zwebner, on October 23, 2007.  The agreement provides for payments of
$3,000 and $5,000, respectively, as compensation for each quarterly and annual
report filed by the Registrant with the Securities and Exchange Commission, as
well as unspecified additional compensation for additional work in connection
with special accounting or regulatory requirements and current reports on Form
8-K, and reimbursement of normal and reasonable expenses.  The
Registrant can terminate the agreement at any time for cause, or without cause
upon 30 days prior written notice.  Mr. Zwebner may terminate the
agreement without good reason (as defined therein) at any time, or with good
reason upon 30 days prior written notice.  The agreement includes
customary covenants regarding confidentiality and non-solicitation of the
Registrant’s business or employees for a period of one year following its
termination.





SDS executed an employment
agreement with its chief executive officer, Shabtai Shoval, on December 18,
2008.  The agreement provides for a base monthly salary of 63,000 New
Israeli Shekels, plus monthly contributions by SDS of an aggregate of 20.84% of
the base salary towards the cost of Mr. Shoval’s life insurance, pension
savings, disability insurance, severance compensation fund and professional
education (collectively, the “Benefits”).  In
addition, SDS will provide Mr. Shoval with an automobile, a cellular telephone
and reimbursement for reasonable expenses incurred in connection with his
duties.  The agreement may be terminated by either party at will, upon
365 days prior written notice.  If SDS terminates the agreement
without cause prior to the expiration of three years, in addition to
compensation during the 365 day notice period Mr. Shoval is entitled to a lump
sum cash payment in an amount (the “Package Value”) equal
to (x) the sum of the base monthly salary, SDS’s monthly contributions towards
the cost of the Benefits and SDS gross cost for the provision of an automobile
and cellular telephone, multiplied by (y) the number of months during the period
commencing 365 days after such termination and ending on the third anniversary
of the date of the agreement.  If Mr. Shoval terminates the agreement
without cause after the expiration of one year or if SDS terminates the
agreement without cause after the expiration of three years, Mr. Shoval is
entitled to a lump sum cash payment in an amount equal to six times the Package
Value.  The agreement includes customary covenants regarding
confidentiality and non-competition with the business of SDS for a period of one
year following its termination.  Pursuant to the Investment Agreement,
on January 20, 2009 the Registrant executed and delivered a guarantee of all of
SDS’s obligations to Mr. Shoval pursuant to this agreement.





Eran
Druckman, who is employed by SDS without a written employment contract, has
received a monthly salary of 40,000 New Israeli Shekels since June
2008.





We do not
have any compensation plans or other arrangements for directors, executive
officers, employees, or consultants that would be triggered by a
change-in-control.





Our Board
of Directors does not have a formally constituted compensation.  Asher
Zwebner, our interim chief executive, chief financial officer and sole director,
determines all matters concerning executive officer compensation.




Item 12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      StockholderMatters.





The
following table lists, as of March 31, 2009, the number of shares of common
stock beneficially owned by (i) each person or entity known to the Registrant to
be the beneficial owner of more than 5% of the outstanding common stock; (ii)
each officer and director of the Registrant; and (iii) all officers and
directors as a group. Information relating to beneficial ownership of common
stock by our principal shareholders and management is based upon information
furnished by each person using “beneficial ownership” concepts under the rules
of the Securities and Exchange Commission.  Under these rules, a
person is deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or direct the voting of
the security, or investment power, which includes the power to dispose or direct
the disposition of the security. The person is also deemed to be a beneficial
owner of any security of which that person has a right to acquire beneficial
ownership within 60 days. Under the Securities and Exchange Commission’s rules,
more than one person may be deemed to be a beneficial owner of the same
securities, and a person may be deemed to be a beneficial owner of securities as
to which he or she may not have any pecuniary beneficial interest. Except as
noted below, each person has sole voting and investment power.




13




Name of Beneficial Owner
                
                Number of Shares
                  Beneficially Owned
                
                
                Percent of Class
                  Beneficially OwnedYosef
      Nachum Benstein
                
                
                4,900,000
                
                
                7.45
                %Asher
      Zwebner
                
                
                120,000
                
                
                
                0.20
                %All
      directors and executive officers (two persons)
                
                
                5,020,000
                
                
                
                7.65
                %





Changes
in Control





Pursuant
to the Second Agreement, as contemplated by the Investment Agreement, the
Registrant plans to issue certain put options to the option and shareholders of
SDS and exchange certain securities of SDS for options to purchase an aggregate
of 29,089,922 shares of the Registrant’s common stock.





Item
13. Certain
Relationships and Related Transactions, and Director
Independence





On
October 30, 2006, we issued 100,000 (post forward stock split) shares of our
common stock to Nachman Shlomo Kohen, our President, CEO, and Director, valued
at $1. Such shares were issued in reliance on an exemption from registration
under Section 4(2) of the Securities Act of 1933. These shares of our common
stock qualified for exemption under Section 4(2) of the Securities Act of 1933
since the issuance of shares by us did not involve a public
offering.





On
November 6, 2006, we issued 25,000,000 (post forward stock split) shares of our
common stock to Yosef Nachum Bernshten, our Secretary and Director, in exchange
for $250 in services and expenses related to our Company. Such shares were
issued in reliance on an exemption from registration under Section 4(2) of the
Securities Act of 1933. These shares of our common stock qualified for exemption
under Section 4(2) of the Securities Act of 1933 since the issuance of shares by
us did not involve a public offering.




Director
Independence





We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our Board comprised of a majority of “independent directors.”
We do believe that the following Directors currently meet the definition of
“independent” as promulgated by the rules and regulations of the American Stock
Exchange.





Item 14.
            Principal Accountant Fees and
      Services





Davis
Accounting Group P.C. provided audit services to the Registrant in connection
with its annual reports for the fiscal years ended December 31, 2008 and 2007.
The aggregate fees billed by Davis Accounting Group P.C. for the audit of the
Registrant’s annual financial statements and a review of the Registrant’s
quarterly financial statements during the fiscal year ended December 31, 2008
and 2007, were:




Fiscal Year EndedDecember 31, 2008
                                        
                                        December 31, 2007Audit
      Fees
                                        
                                        $
                                        14,000
                                        
                                        $
                                        
                                        14,000




14






Audit
Committee Pre-Approval





The
Registrant does not have a standing audit committee.  All audit,
audit-related, tax, and all other fees paid to Davis Accounting Group P.C. were
pre-approved by the Registrant’s Board of Directors.




PART
IV


Item
      15.
            Exhibits, and
      Financial Statement
Schedules





Exhibit
                No.
              
              Description3.1
              
              Certificate
      of Incorporation of Company (annexed to the Company’s Registration
      Statement on Form SB-2 filed with the Securities and Exchange Commission
      on March 12, 2007).3.2
              
              Bylaws
      of the Company (annexed to the Company’s Registration Statement on Form
      SB-2 filed with the Securities and Exchange Commission on March 12,
      2007).10.1
              
              Employment
      Agreement, dated October 23, 2007, between PCMT Corporation and Asher
      Zwebner (annexed to the Company’s Current Report on Form 8-K filed with
      the Securities and Exchange Commission on October 29,
    2007).10.2
              
              Letter
      Agreement, dated October 18, 2007, between PCMT Corporation and Suspect
      Detection Systems Ltd. (annexed to the Company’s Current Report on Form
      8-K filed with the Securities and Exchange Commission on October 29,
      2007).10.3
              
              Form
      of Regulation S Subscription Agreement (annexed to the Company’s Current
      Report on Form 8-K filed with the Securities and Exchange Commission on
      October 29, 2007).10.4
              
              Letter
      of Intent dated November 14, 2007, between PCMT Corporation and Suspect
      Detection Systems Ltd. (annexed to the Company’s Current Report on Form
      8-K filed with the Securities and Exchange Commission on November 15,
      2007).10.5
              
              Form
      of Regulation S Subscription Agreement, including Form of Class A Warrant
      and Form of Class B Warrant (annexed to the Company’s Current Report on
      Form 8-K filed with the Securities and Exchange Commission on November 15,
      2007).32.1
              
              Section
      1350 Certification of Principal Executive and Financial
      Officer*32.2
              
              Section
      1350 Certification of Principal Executive and Financial
      Officer*




*
            Filed
      herewith.




15




SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned thereunto
duly authorized.





SUSPECT
      DETECTION SYSTEMS INC.Dated:
      March 31 , 2009
                    By:
                    /s/
      Asher ZwebnerAsher
      ZwebnerInterim
      Chief Executive Officer, Chief Financial
                      Officer
      and Sole Director
                      (Principal
      Executive Officer, Financial, and
                      Accounting
      officer)




16