UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

[x]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934 [Fee Required]

                  For the fiscal year ended September 30, 1996

                                       OR

[  ]     TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 [No Fee Required]


For the transition period from _____________________ to ________________________


                        Commission file number: 33-9868-A


                      Shepherd Surveillance Solutions, Inc.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)


                    NEVADA                                      88-0212471
---------------------------------------------             --------------------
(State of other jurisdiction of incorporation               (I.R.S. Employer
 or organization)                                          Identification No.)


7 Perimeter Road, Suite 4, Manchester, New Hampshire               03103
--------------------------------------------------------------------------------
(Address of principal executive offices)                         (Zip Code)


Issuer's telephone number, including area code:           603-622-8668
                                               ---------------------------------

Securities registered pursuant to Section 12(b) of the Act:

      Title of each class           Name of each exchange on which registered
      -------------------           -----------------------------------------
            None                                     None


Securities registered pursuant to Section 12(g) of the Act:         None
                                                              ------------------
                                                               (Title of Class)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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
[ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will 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-KSB or any
amendment to this Form 10-KSB. [ x]

Issuer's  revenues for its most recent fiscal year are  $656,708.  The aggregate
estimated market value of the voting stock held by  non-affiliates of the issuer
as of December 31, 1996 is $-0- based upon the assumption that all directors and
officers of the Company,  and their families,  are  affiliates.  At December 31,
1996,  4,293,822  shares of common  stock,  $.001  par  value  per  share,  were
outstanding.



                                      -2-

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

RECENT DEVELOPMENTS

The registrant  (the "Company" or "Shepherd")  was  incorporated in the State of
Nevada in 1985, under the name IMProCOM, Inc. and on March 11, 1996, changed its
name to InVision Technology,  Inc.  Since its founding,  the Company has engaged
primarily  in  the  design,   development   and  marketing  of  computer   based
technologies  involving  image graphics  processing and data  retrieval.  In May
1996,  the name of the Company was changed to Shepherd  Surveillance  Solutions,
Inc. in connection with a restructuring  of the management and operations of the
Company,  designed  to enable  the  Company  to better  meet the  demands of the
security market. A new chief executive was hired and the Company's  headquarters
were relocated from Florida to Manchester, New Hampshire. The Company's decision
to relocate to New Hampshire was based on, among other things,  availability  of
resources (services and personnel), accessibility of transportation for products
and customers, and lower cost of operation.

A thorough  analysis of the  security  market was  conducted by the Company from
November  1995 until March  1996.  This  analysis  indicated  that the  security
industry as a whole is estimated at $50  billion.  The security  industry can be
further broken down into electronic surveillance, which the Company estimates is
approximately $10 billion,  and CCTV (Closed Circuit  TeleVision) (which was and
is the Company's core business), which the Company estimates is approximately $3
billion, with a projected growth rate of 30% annually.

In addition to a review of the security market,  an analysis was done of certain
competitors'  products  and  business  direction,  as well as the  trend  in the
security industry to integrate CCTV with other security  methods.  The foregoing
led the  Company's  management  to adopt  fundamental  changes in the  Company's
business plans,  which are being implemented  across all operating  functions as
follows:

DEVELOPMENT:  The Company  expects to focus now on developing  generic  security
software  integrated with PC hardware to create modular,  rather than customized
high-end, solutions to common video surveillance and security problems. Although
the  development  of hardware  continues,  the  complete  system  solutions  are
designed  primarily to take advantage of the  performance  and cost advantage of
the Shepherd  developed  software.  New products are designed by using  existing
state-of-the-art  technology from the computer industry to create PC-based video
and security management systems. Where it makes business sense, the Company will
try  to  create  strategic  relationships  with  other  manufacturers  to  bring
competitive products to market quickly.





                                      -3-



SALES:  Rather than  selling  only to end users  directly or limiting  its sales
efforts only to the bidding  process which can be costly,  the  Company's  sales
efforts  will be  broadened  and will  focus  on a  worldwide  basis to  include
security distributors, dealers, integrators and Original Equipment Manufacturers
("OEMs").  Distribution  arrangements have been set up covering 20 countries and
the  Company  is  currently  negotiating  several  key OEM  deals.  A West Coast
presence was  established  in the first quarter of fiscal 1997 to better address
dealer and integrator sales.

MARKETING:  A new  product  roadmap  was  defined  that  supported  the trend of
integrating video  surveillance and security  functions into the PC via hardware
and software products.  A greater emphasis on public relations,  advertising and
targeted  trade show  attendance,  using  dealers to provide  presence  at minor
shows, has been adopted.  Marketing, like sales, is focused worldwide, no longer
limited to North America.  Target  customers are no longer just high-end,  large
custom installations.  The middle market, small to mid-sized CCTV installations,
are the Company's primary marketplace. The Company believes that these potential
customers  represent the bulk of the market which,  prior to the introduction of
PC-based security solutions, could not afford the high-end solutions.

CUSTOMER  SERVICE:  Focus has shifted  away from  providing  site  planning  and
installation services to providing educational,  training and technical support.
All  installation  and direct selling is done by the  distributors  and dealers.
Technical support will be set up to support the dealer and distributor  training
and in the event they cannot resolve a particular issue.

BUSINESS OF REGISTRANT

The  Company's  systems  provide  generic  surveillance  hardware  and  software
solutions to various vertical markets requiring security.  These markets include
and are not limited to retail, financial, facilities management, transportation,
correctional  facilities,  and environmental control. The open,  non-proprietary
architecture of the Company's  solutions allow for easy  customization  by OEMs,
system  integrators and dealers and distributors.  The Shepherd system solutions
also allow for easy integration into other surveillance markets including access
device   control,   camera   control,   environmental   management   and  remote
surveillance.  The  Company's  modularly  designed  system can be installed in a
custom solution or can be easily added into existing  surveillance  systems. The
Company  believes  that its new  products  will allow the end users to  purchase
complete  solutions  from  distributors,  dealers and  installers  to meet their
surveillance  needs,  and that these products should not be difficult to install
and use.

The Company's  technologies are currently geared to generic (not vertical market
specific) security applications. Providing a generic PC-based product to dealers
and





                                      -4-

integrators  allows them to better  service their  customers for their  specific
application and market needs by adding value. Such value can come in the form of
supplying   cameras,   monitors  and  other   peripherals.   More  sophisticated
integrators  can  add  additional   customer  benefits  by  utilizing   Shepherd
diagnostic  tools for technical  support,  customizing  the user interface for a
particular application, (e.g., retail store, banking, facilities management), or
generating detailed reports using the Shepherd database.

Although  the Company  believes  that the CCTV  security  industry  offers great
opportunities,  Shepherd  products  are  designed  to try to take  advantage  of
related markets,  including  integration with access device controls,  and alarm
monitoring,  as well as facilities and environmental  management.  Some industry
analysts  predict that over the next few years  various  security  facets should
become  integrated  into one  product.  The  Company  hopes that its modular and
easily  customizable  design  will  allow  Shepherd  to  take  advantage  of the
increasing integration trend within the security industry.

The Company  believes  that the security  industry,  in general,  is  relatively
insulated  from the  fluctuations  in  overall  economic  activity,  but has the
potential to be a growth industry of significant size. In general,  the need for
electronic  security  systems is  strongest  where risk of exposure is greatest.
Financial institutions, government buildings, cultural institutions and museums,
military  facilities and public  utilities are primary examples of entities that
may have acute  security  needs.  Such entities  usually have less concern about
system cost and place greater value on reliability and effectiveness.

The Company has changed its focus from being just a "custom  shop",  focusing on
high-end jobs, to providing a product line available to all sizes of businesses.
In 1996,  Shepherd  began  phasing  out  "older  generation"  products,  such as
Pan-Tilt-Zoom  (PTZ) controllers and separate alarm and relay boxes. The Company
also  redefined,  reconfigured  and  repackaged  its existing line into discrete
components  which may be sold as  individual  products in order to penetrate the
distribution,  reseller  and  system  integration  marketplaces.  The base  line
technology for these new "box" products was derived from the Company's  previous
high end,  DOS-based  Patriot  systems.  This  development  also  provides  past
customers with an upgrade path for their  expanding  surveillance  needs without
having to replace their existing  equipment.  The modification,  reconfiguration
and repackaging of the Company's  products began in early 1996 and is planned to
continue  throughout  1997.  The Company  began  shipping new products from this
effort in the Summer of 1996.

In August of 1996, the Company  announced its MiniPatriot,  a Microsoft  Windows
95TM surveillance  management system, at the ISC Expo in New York City. The ISC,
one of the two largest domestic security trade shows,  provided the Company with
an  introduction  for its  newest  product.  Additionally,  several of the major
security




                                      -5-


publications  carried an  announcement  in their issues over the  following  few
months.  A full page,  four-color ad campaign was run in three of the industry's
domestic trade magazines,  as well as in three widely circulated  European trade
magazines.

The Microsoft  Windows 95 compatible  MiniPatriot  offers  reliable,  affordable
PC-based video  surveillance  for small and  medium-sized  businesses.  This new
PC-based   camera   switching  and  control   system   delivers  the  power  and
functionality of a large,  computerized  surveillance system in a small, modular
package.

The MiniPatriot supports picture-in-picture  technology and up to 30 cameras. It
is based on an industry-standard Intel Pentium(TM) PC with up to 16MB RAM, a 1GB
hard drive,  Shepherd's  Surveillance-Manager  Software and Microsoft's  popular
Windows 95 operating system. All camera control functions,  including switching,
pan, tilt, zoom and presets are initiated through the software.

Shepherd systems' modular and open,  non-proprietary  design allows customers to
pick and choose add-on products and  functionality.  The base system consists of
an  Intel-based  PC into which  Shepherd's  video  switcher board is integrated.
Shepherd's Surveillance Management Software and Microsoft's Windows 95 operating
system are pre-installed. Dealers supply a PC monitor (standard or touchscreen),
additional TeleVision monitors,  along with black and white or color cameras and
a videotape  recorder.  The software  performs the system control and management
functions. Through the PC monitor, an operator, utilizing sophisticated graphics
software, can tune or reprogram system parameters, enhance images, examine alarm
situations  close-up  and  review  questionable  events.  The  system  continues
recording while these other functions are being performed.

A customer can add alarm  monitoring  functions  and relay control by purchasing
Shepherd's  Auxiliary  Relay Unit  (ARU) and Alarm  Input  Unit  (AIU).  The ARU
handles up to 24 relays  which can  include  gates,  lights  and locks.  The AIU
handles up to 48 alarms. Alarms can be generated by a number of different events
including motion detection, doors opening, or temperature changes. If a customer
requires pan tilt zoom control, they can purchase Shepherd's PTZ Driver unit for
each PTZ camera.

Under the  modular  concept,  pricing  of the  product  has been  designed  on a
features used basis.  Customers with limited  initial needs can reduce  selected
features and accordingly  lower their costs. As needs increase,  features can be
quickly  added.  The  introduction  by the  Company  of its  new  modular  "box"
products; such as the AIU and ARU, facilitates upgrades by customers.

The Company  believes its technology is ahead of the security  industry and that
none of its  competitors  currently  offer  products  which operate in a fashion
similar to its PC based modular systems.  No patents have been obtained,  as the
Company believes





                                      -6-


that the patent  process  would force  disclosure  of  technological  detail and
eventually erode competitive  advantage.  Design  protection  features have been
incorporated  into the systems and the  Company  believes  that such a course is
prudent.

During  fiscal  1995 and for most of  fiscal  1996,  a  significant  part of the
Company's  business was derived from a small number of  customers.  For the year
ending   September  30,  1995,   three  (3)  customers  were   responsible   for
approximately 68% of the Company's  revenues.  For the year ending September 30,
1996,  three  (3)  customers  were  responsible  for  approximately  79%  of the
Company's revenues. The Company, with its adoption of fundamental changes in its
business  plans,  expects and hopes that such heavy  reliance on a few customers
will diminish significantly.

The Mini Patriot  system has been designed to keep the amount of production  and
distribution  resources  to a minimum.  A variety of vendors do the  majority of
manufacturing  and parts assembly.  Computer software is designed and written by
the Company.  All contracts with suppliers who modify commodity  devices for the
Company include design protection  agreements.  Shepherd's current software is a
Windows 95 based  package,  in contrast  to the older DOS based  standard in the
video  surveillance  industry.  The Company's  present platform  (Windows 95) is
adaptable to other advanced 32 bit applications  (Windows NTTM) now released for
commercial use.

Where possible, the Company utilizes modular parts, boards, components and chips
made to its specifications.  Final assembly and quality control of the system is
by the Company prior to shipment to the customer.

To enhance  its  penetration  of the  domestic  marketplace,  the  Company has a
full-time  employee  in  California,  giving the  company a presence on the West
Coast.  This  sales  person  intends  to  focus  on  integrators,   dealers  and
distributors.  The sales office in New Hampshire  primarily focuses on OEMs. The
Company's  European  office is located in the UK and has  negotiated a strategic
partnership  with  Grange  Associates  ("Grange"),  a national  UK company  well
established in the security industry. Grange's contacts have provided a low cost
and  relatively  fast entry  into  Europe and  established  credibility  for the
Company's product lines and enabled  penetration across markets.  The Company is
negotiating an exclusive distribution agreement in Malaysia.

As of December  31,  1996,  the Company had 30  employees,  27 of which are full
time. 



ITEM 2.  DESCRIPTION OF PROPERTY





                                      -7-


The Company  leases  approximately  10,000  square feet in one  building for its
office,  engineering and manufacturing space in Manchester,  New Hampshire.  The
Company  believes  the  site is  adequate  for  its  use  and is not  materially
important to the business.  The five year operating  lease requires annual lease
payments which range from $40,000 in 1997 to $47,000 in 2001.

The Company incurs annual rental payments of approximately $12,500 in connection
with the European office.

ITEM 3.  LEGAL PROCEEDINGS

As of the date hereof,  there are no material pending legal proceedings to which
the Company is a party or of which any of its property is the subject.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of fiscal 1996.

By action of written consent dated as of September 10, 1996, the owner of record
of a majority of the outstanding  voting capital stock (Trilon Dominion Partners
L.L.C.) of the  Company  replaced  M.  Thomas  Makmann  as  William  J.  Hopke's
successor as a member of the board of directors and approved the adoption by the
Compensation  Committee of the board of  directors  to provide  nondiscretionary
option  grants  to M.  Thomas  Makmann  for a total of  1,685,636  shares of the
Company's common stock.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established  current public trading market for the Company's  common
stock, and no dividends have been declared during the last two fiscal years with
respect to the common stock. At September 30, 1996, there were approximately 375
security holders of record.

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

RESTATEMENT OF QUARTERLY FINANCIAL INFORMATION

As  disclosed in Notes 8 and 10 to the Notes to  Financial  Statements  included
herein,  the Company  entered into a settlement  agreement with its former Chief
Executive  Officer on October  17,  1995.  Among  other  things,  the  agreement
provided  for the  release by the  executive  of deferred  salaries  aggregating
$456,384,  which was  




                                      -7-


accrued as a liability at September 30, 1995.  In its Quarterly  Reports on Form
10-QSB for the three-month  periods ended December 31, 1995,  March 31, 1996 and
June 30, 1996,  the  Company's  financial  statements  reflected  the release of
deferred salaries as Additional  Paid-In Capital.  While preparing its financial
statements  for its 1996 fiscal  year,  the Company  determined  that it is more
appropriate  to record the $456,384 as a Gain on  Litigation  Settlement  in the
Statement of Operations.  The effect on the quarterly  financial data previously
reported follows:

                                                     QUARTER ENDED:
                                     -------------------------------------------
                                     DECEMBER 31,       MARCH 31,       JUNE 30,
                                         1995             1996             1996
AS REPORTED:
  Additional paid-in capital          $6,226,714      $6,226,714      $6,226,714
  Other income (expense)                (26,185)        (35,795)        (44,129)
  Net (loss)                           (210,662)       (257,094)       (729,826)
  Net (loss) per share                     (.05)           (.06)           (.17)

As restated:
  Additional paid-in capital          $5,770,330      $5,770,330      $5,770,330
  Other income (expense)                 430,199        (35,795)        (44,129)
  Net income (loss)                      245,722       (257,094)       (729,826)
  Net income (loss) per share                .05           (.06)           (.17)

RESULTS OF OPERATIONS

The  accompanying  Financial  Statements  included  herein have been prepared in
conformity with generally  accepted  accounting  principles,  which  contemplate
continuation  of the Company as a going  concern.  The  Company has  experienced
substantial operating losses for the past several years and, as of September 30,
1996, the Company has a shareholders'  deficit of $3,461,242.  In addition,  the
Company's  sales currently do not generate  working  capital  sufficient to meet
future  operating  requirements.  These factors indicate that the Company may be
unable to continue as a going concern.  The 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.

The  Company's  ability to continue in operation is dependent  upon its ability,
among other things,  to generate a  significant  increase in sales volume of its
new products, its ability to obtain the financing necessary to fund its expanded
operations and,  ultimately,  its ability to achieve profitable  operations.  At
present, it is not possible to determine the ultimate outcome of these matters.

For the year ended September 30, 1996 ("fiscal 1996"), the Company's revenues of
$656,708  were  comprised  as  follows:  approximately  60%  represents  revenue
deferred  in  1995,  but  recognized  in  fiscal  1996  after   satisfaction  of
development/production  contracts  from prior  years  with two large  customers;
approximately 30% represents  hardware and software service work done in 1996 on






                                      -8-


systems sold by the Company in prior years, most of which was invoiced on a time
and  materials  basis;  and  approximately  10% arose in the last two  months of
fiscal 1996 from sales of the Company's new products. Total fiscal 1996 revenues
were  approximately  $507,000 higher than the previous year,  principally due to
current year recognition of deferred revenues on the aforementioned contracts.

The large increases in selling,  general and  administrative  expenses in fiscal
1996 over the previous year resulted from costs  associated  with  promoting the
Company's   revamped   products  and  the  concomitant   expense  of  sales  and
administrative staff to manage and support that effort.

Research and development  increased by approximately  $385,000 in fiscal 1996, a
direct  reflection  of the  engineering  costs  necessary  to achieve a level of
reliability  acceptable to the Company for the software  programming used in the
Company's current product line.

Interest expense increased  approximately  $137,000 over the prior year. This is
as a result of the much higher level of  interest-bearing  debt  incurred by the
Company  throughout fiscal 1996 which was obtained to fund the Company's product
line transition and operating expenses.

As discussed in Notes 8 and 10 of the Notes to Financial Statements appearing in
this Annual Report on Form 10-KSB,  the gain on litigation  settlement  resulted
from the release of deferred  salaries  which were a liability of the Company at
September 30, 1995.

During fiscal 1995, the Company accrued an expense of $110,577  representing the
settlement  of an  employment  contract.  See  Notes 8 and 10 of  the  Notes  to
Financial Statements for a full discussion of this settlement.

As a result of operating losses,  the Company made no provision for income taxes
in fiscal 1996 and fiscal  1995.  At  September  30,  1996,  the Company has net
operating loss carryforwards of approximately  $2,100,000 for federal income tax
purposes. These carryforwards will begin to expire in fiscal year 2011. See Note
6 of the Notes to Financial  Statements  for a full  discussion of the Company's
accounting for income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Management  believes  that  the 1.1 to 1 ratio  of  current  assets  to  current
liabilities  in the  fiscal  1996  financial  statements,  as well as the  total
Shareholders' Deficit, reflects the Company's current lack of liquidity.





                                      -10-


Trilon  Dominion   Partners,   L.L.C.,  a  Delaware  limited  liability  company
("Trilon"), the owner of 78% of the Company's outstanding common stock as of the
date hereof,  advanced  $2,734,000 to the Company during fiscal 1996,  which was
the principal source of the Company's working capital for the year.

The Company had cash and cash equivalents of approximately $117,000 at September
30,  1996 and  further  borrowings  were  available  from  Trilon.  The  Company
subsequently borrowed  approximately  $1,152,000 during the first quarter of its
1997 fiscal year. See Notes 8 and 11 of the Notes to Financial  Statements for a
full discussion of the Company's outstanding indebtedness.

During the next two fiscal  quarters,  the Company  intends to apply any capital
received (from Trilon or others) to the continued  development of its technology
and to the further positioning of its products in the market. Such costs will be
for engineering,  promotion,  marketing,  and production materials.  The Company
recently  began   preliminary   negotiations  with  a  commercial  bank  for  an
asset-based line of credit.

The  Company  hopes  it will  generate  enough  positive  cash  flow to repay or
negotiate an  appropriate  repayment  schedule for the long-term  debt under the
credit agreement and the other borrowing  arrangements  with Trilon (see Item 12
below for further  detail).  The Company intends to use the resources  described
above, and any additional  capital raised or amounts  borrowed,  to continue its
development efforts to enhance its line of new products by further technological
research.

RISK FACTORS AND CAUTIONARY STATEMENTS

When used in this Form  10-KSB  and in other  filings  by the  Company  with the
Securities and Exchange Commission,  in the Company's press releases and in oral
statements made with the approval of an authorized  executive officer, the words
or phrases  "will likely  result",  "are  expected  to",  "will  continue",  "is
anticipated",  "estimate",  "project",  "hope to",  or similar  expressions  are
intended  to  identify  "forward-looking  statements"  within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties, including but not limited to those discussed in
the Notes to the Financial  Statements  and under this caption "Risk Factors and
Cautionary  Statements",  that could cause actual  results to differ  materially
from  historical   earnings  and  those  presently   anticipated  or  projected.
Forward-looking  statements in this Annual Report on Form 10-KSB include but are
not limited to  statements  regarding  the  Company's:  (i) hopes of  generating
enough positive cash flow to repay its significant  indebtedness and continue as
a going concern,  (ii) belief that it can be competitive in the security systems
market, (iii) ability to develop new products,  broaden its sales and expand its
marketing efforts,  (iv) increase its sales, stay ahead of the technology in the
industry,  and expand its business  generally,  (v) expectations  that its heavy
reliance on a few customers will diminish significantly; (vi) belief that it can
focus on a middle market and can take  advantage of the  increasing  integration
trend within the  security  industry,  (vii)  continued  expansion.  The Company
wishes to caution readers not to place undue reliance on





                                      -11-


any such forward-looking  statements,  which speak only as of the date made, and
wishes to advise readers that the factors listed below could cause the Company's
actual  results for future  periods to differ  materially  from any  opinions or
statements expressed with respect to future periods in any current statements.

The Company will NOT  undertake  and  specifically  declines any  obligation  to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

o    The  Company's  future  operating  results are  dependent on its ability to
     develop,  produce and market new and innovative  products and technologies,
     and  eventually  to  enter  into  favorable   licensing  and   distribution
     relationships.  There are numerous risks inherent in this complex  process,
     including  the risk  that  rapid  technological  change  could  render  the
     Company's products obsolete,  the risk that the Company will not be able to
     timely  develop new products at a reasonable  cost that find  acceptance in
     the marketplace,  and the risk that the Company will not be able to develop
     procedures to bring to these products to the market in a timely fashion.
o    The Company's continued working capital and cash resources are dependent on
     its ability to obtain additional  financing in the future, as the Company's
     operations currently generate minimal revenues or income.
o    The Company is highly leveraged,  having borrowed  $2,734,000 during fiscal
     1996  from  its  majority  shareholder  without  repaying  any  amounts  of
     principal or interest due on these  loans.  There can be no assurance  that
     the Company  will be able to pay  principal or interest due on any of these
     loans from time to time.  Any failure to pay interest or  principal  due on
     these loans could have a material adverse effect on the Company.
o    A single shareholder,  Trilon Dominion Partners,  L.L.C. ("Trilon"),  which
     has been the Company's  principal lender,  currently holds 3,367,802 shares
     of common stock (78% of the  outstanding  common stock) and holds a warrant
     to purchase  14,226,578  additional  shares of the Company's  common stock.
     Trilon is and will be able to elect  all of the  Company's  directors  and,
     generally,  to direct the affairs of the Company.  Trilon could effectively
     block any majority corporate transactions,  such as a merger or sale of all
     of the Company's assets,  which, under Nevada law, requires the affirmative
     vote of  holders  of a  majority  of the  outstanding  common  stock of the
     Company. In addition,  with respect to and as consideration for other funds
     borrowed from Trilon  Dominion  Partners,  L.L.C.,  the Company  intends to
     issue additional warrants for shares of the Company's common stock.
o    The  Company  has  incurred  recurring  losses  from  operations  and has a
     significant shareholders' deficit. These conditions raise substantial doubt
     about the Company's ability to continue as a going concern.




                                      -11-


Furthermore,  the Company's  operating results have varied from fiscal period to
fiscal period;  accordingly,  the Company's  financial results in any particular
fiscal period are not necessarily indicative of results for future periods.

ITEM 7.  FINANCIAL STATEMENTS

This item is  submitted  in a  separate  section of this  Annual  Report on Form
10-KSB.

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

Change in Certifying Accountant

By action of written consent, the Board of Directors of the Company approved the
engagement of Ernst & Young LLP, as its independent auditors for the fiscal year
ending  September 30, 1996, to replace the firm of James Moore & Co.,  P.L., who
were dismissed as auditors of the Company effective as of November 25, 1996.

The reports of James Moore & Co., P.L. on the registrant's  financial statements
for the past two fiscal years did not contain an adverse opinion or a disclaimer
of opinion. The reports of James Moore & Co., P.L. on the registrant's financial
statements  of September  30, 1995 and 1994 were  modified as to an  uncertainty
over whether the registrant had the ability to continue as a going concern.

In connection with the audits of the Company's financial  statements for each of
the two fiscal years ended September 30, 1994 and September 30, 1995, and in the
subsequent interim periods,  there were no disagreements with James Moore & Co.,
P.L. on any matters of accounting  principles or practices,  financial statement
disclosure,  or auditing  scope and  procedures  which,  if not  resolved to the
satisfaction  of James Moore & Co.,  P.L.,  would have caused James Moore & Co.,
P.L. to make reference to the matters in their report.

The Company  requested James Moore & Co., P.L. to furnish a letter  addressed to
the Commission stating whether it agrees with the above statements.  See Exhibit
16 hereto.

                                    PART III

Item 9.  Directors,  Executive Officers,  Significant  Employees,  Promoters and
         Control Persons, Compliance with Section 16(a) of the Exchange Act.

The following table sets forth  information with respect to the persons who are,
at the  present  time,  directors  and/or  executive  officers  and  significant
employees of the 





                                      -13-


Company.  The terms of office of all the  directors  will expire on the later of
the 1997 Annual Meeting of Shareholders  and the date on which their  successors
are duly elected and qualified.

<TABLE>
<CAPTION>

                <S>                                             <C>                             <C>  
                Name                                         Period Served                     Expire
------------------------------------------------------- -------------------------------------- --------------
Jack R. Sauer, 44, director                             Director since Dec. 20, 1995           Feb. 1997
------------------------------------------------------- -------------------------------------- --------------
M. Thomas Makmann,  49, CEO, chief operating  officer,  Since June 1, 1996                     Feb. 1997
acting chief financial officer, president and director
------------------------------------------------------- -------------------------------------- --------------
Ronald W.  Cantwell,  53,  vice-president,  treasurer,  Since Dec. 20, 1995                    Feb. 1997
assistant secretary and director
------------------------------------------------------- -------------------------------------- --------------
Dorotea Abele, vice-president, marketing                Since July 8, 1996                     N/A
------------------------------------------------------- -------------------------------------- --------------
J. Roger Kirkland, vice-president sales-international   Since July 1, 1996                     N/A
------------------------------------------------------- -------------------------------------- --------------
John Leone, vice-president engineering                  Since July 1, 1996                     N/A
------------------------------------------------------- -------------------------------------- --------------
Barry M. McGriff, vice-president sales-Americas         Since July 1, 1996                     N/A
------------------------------------------------------- -------------------------------------- --------------
</TABLE>


JACK R. SAUER, 44, has been the chairman of the Company since March 1, 1996, and
has been a director  of the  Company  since  December  20,  1995.  A graduate of
Bernard  M.  Baruch  College,   Mr.  Sauer  is  the  chief  financial   officer,
vice-president  and a director  of VC  Holdings,  Inc.  a  Delaware  corporation
("VCH"), which is wholly-owned by Ronald W. Cantwell. VCH has 100% of the voting
rights and  management  of Trilon  Dominion  Partners,  LLC, a Delaware  limited
liability company ("Trilon"),  which is the majority stockholder of the Company.
Mr. Sauer is on the board of Accessware, Inc.

M. THOMAS MAKMANN,  49, served as the president and chief  operating  officer of
the Company from March 1996 until June 1996, at which time he became director of
the Company and was appointed CEO. A graduate of Michigan Technology University,
Mr.  Makmann most  recently  served as the  president of Sytron  Corporation,  a
wholly-owned  subsidiary  of Rexon  Corporation,  from  1993 to  1995.  Prior to
joining Sytron, he held key managerial positions at Maxtor Corporation,  Archive
Corporation,   Shugart   Associates,   Memorex   Corporation  and  Control  Data
Corporation.

RONALD  W.  CANTWELL,  53,  has been the  vice-president,  treasurer,  assistant
secretary and director of the Company since December 20, 1995. A graduate of the
University  of  Wisconsin,  Mr.  Cantwell  is the  president,  100%  owner and a
director  of VCH.  He is on the board of Odyssey  Nutriceutical  Science,  Inc.,
Caldera Environmental Corporation and Morrison International, Inc.

DOROTEA  ABELE,  39, was appointed Vice President of Marketing of the Company on
July 8, 1996. A graduate of Clark University,  Ms. Abele most recently served as
the Director of Marketing for Seagate Software,  previously Sytron  Corporation,
since 1990.

J. ROGER KIRKLAND,  42, was appointed Vice President of  Sales-International  of
the Company on July 1, 1996. Mr. Kirkland most recently served as Vice President
of





                                      -14-


Distribution  sales for Rexon.  Prior to joining  Rexon in 1993, he was Managing
Director of ARKAY, a marketing  consultant firm providing business channels into
Europe for Far Eastern companies.

JOHN C. LEONE, 46, was appointed Vice President of Engineering of the Company on
July 1, 1996. A graduate of the  University of Maryland in 1975,  Mr. Leone most
recently served as the VP of Operations for Open  Technologies in Henniker,  NH.
Prior to joining Open  Technologies  in 1987, he worked for Siemens Nixdorf as a
Principal Design Engineer.

BARRY M. MCGRIFF,  49, was appointed  Vice  President of  Sales-Americas  of the
Company on July 1, 1996. A 1971 graduate of the  University  of  Minnesota,  Mr.
McGriff most  recently  served as Managing  Director of Rexon  Europe.  Prior to
joining Rexon in 1993, he was VP of Worldwide Sales at Quantum Corporation.

The Company  has not yet  established  a slate of  nominees  for the 1997 Annual
Meeting of the Company's shareholders.

There  are no  family  relationships  among the  Company's  executive  officers,
directors and significant employees.

Mr. Sauer and Mr. Cantwell are officers and directors of VCH.

ITEM 10.  EXECUTIVE COMPENSATION.

                           SUMMARY COMPENSATION TABLE

                   Annual Compensation               Awards
------------------------------------------------------------------------------- 
            (a)                 (b)        (c)         (g)

Name
and
Principal                   Fiscal                  Options/
Position                     Year      Salary($)    SARs (#)
                                        
                          ----------  ----------  ------------
M. Thomas Makmann, CEO       1996       $48,750     1,685,636


Jack R. Sauer                1996         -0-         -0-
CEO
                             1995         -0-         -0-

                             1994         -0-         -0-


Frederick  Jenner  resigned as CEO of the Company in January 1995.  Effective at
that time, William Hopke became CEO of the Company and served as CEO until March
1, 1996. Effective as of March 1, 1996, Mr. Sauer became CEO of the Company. Mr.
Jenner  resigned  as the  chairman  of the Board of  Directors  and as the Chief
Technical Officer of the Company effective as of October 17, 1995.

Mr. Sauer served as CEO until June 1996, at which time Mr. Makmann was appointed
CEO of the Company.





                                      -15-


There are no SARs.  Pursuant to the 1996 Stock Option Plan, the Company  granted
Mr.  Makmann  options to purchase  1,685,636  shares of common stock at $.01 per
share, none of which were exercisable at September 30, 1996.

The Company does not pay directors a fee for their services as directors.
<TABLE>
<CAPTION>

                          OPTION GRANTS IN FISCAL 1996
<S>                        <C>                       <C>                  <C>                       <C>
----------------------- --------------------- -------------------- --------------------- ----------------------
                             Number of        % of Total Options
                             Securities           Granted to
                         Underlying Options      Employees in
         Name                                     Fiscal Year         Exercise Price        Expiration Date
----------------------- --------------------- -------------------- --------------------- ----------------------
M. Thomas Makmann       1,685,636 (1)                39.8%         $.01 / share          Five years from
                                                                                         grant date
----------------------- --------------------- -------------------- --------------------- ----------------------
</TABLE>


(1)    Options become exercisable based on holding periods and on other criteria
       relating to the operations of the Company.

         AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND YEAR END OPTION
                                     VALUES
<TABLE>
<CAPTION>

------------------------ ------------- ------------- ----------------------------- ------------------------------
                                                         Number of Securities          Value of Unexercised
                                                        Underlying Unexercised        In-The-Money Options at
                                                       Options at September 30,         September 30, 1996
                                                                 1996
------------------------ ------------- ------------- ----------------------------- ------------------------------
         <S>                 <C>            <C>          <C>           <C>            <C>            <C>
                            Shares
                         Acquired on      Value
         Name              Exercise      Realized    Exercisable   Unexercisable   Exercisable   Unexercisable
------------------------ ------------- ------------- ------------- --------------- ------------- ---------------
M. Thomas Makmann        None               $0       N/A           1,685,636       N/A           None
------------------------ ------------- ------------- ------------- --------------- ------------- ---------------
</TABLE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

<TABLE>
<CAPTION>


<S>                                               <C>                                  <C>  
Name of Beneficial Owner (Address included for    Amount and Nature of Beneficial      Percent of
persons known to hold more than 5%)               Ownership                            Outstanding Stock
----------------------------------------------    -------------------------------     ------------------
Trilon Dominion Partners, LLC                     3,367,802 owned directly (1)         78.4%
245 Park Avenue, 28th Floor
New York, NY

M. Thomas Makmann                                 0                                    0%

Jack R. Sauer*                                    0                                    0%

Ronald W. Cantwell*                               3,367,802 owned indirectly (1)       78.4%

Dorotea Abele                                     0                                    0%

J. Roger Kirkland                                 0                                    0%

John C. Leone                                     0                                    0%

Barry M. McGriff                                  0                                    0%






                                      -16-


All Officers and Directors as a Group            3,367,802    individually   and       78.4%
                                                 jointly, record and  beneficial
                                                 including those owned by Trilon
                                                 Dominion Partners, LLC
*  Officers and Directors of VCH.
</TABLE>

(1) Trilon holds  warrants to purchase an  additional  14,226,578  shares of the
Company's common stock and the Company intends to issue  additional  warrants to
Trilon in connection with and as  consideration  for other and additional  funds
borrowed by the Company from Trilon.

Note: The numbers shown above include  duplication,  because shares beneficially
owned by more than one person or entity are  reported as  beneficially  owned by
all such persons or entities.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On  November  1,  1995,  Dominion  Capital,   Inc.   ("Dominion"),   a  Virginia
corporation,  finalized the transfer of its ownership of 3,367,802 shares of the
Company's common stock to Trilon in exchange for a non-voting Class B membership
interest in Trilon.  The only other member of Trilon is VCH, the sole manager of
Trilon and the holder of 100% of the voting interests in Trilon.

During the year ended  September  30,  1995,  Dominion  exercised  a warrant for
2,650,000  shares  of the  Company's  common  stock  pursuant  to  its  existing
line-of-credit  agreement with the Company.  The warrant was  exercisable by its
terms at $1.00 per share. In lieu of paying the exercise price in cash, Dominion
converted its outstanding loan to the Company,  in the amount of $2,650,000,  to
common stock.

During the year ended September 30, 1995,  Dominion  amended its  line-of-credit
agreement  with  the  Company  to  provide  a total of  $900,000  to draw on for
operations.  At  September  30,  1995,  the Company had  borrowings  of $825,000
outstanding  under this agreement.  The remaining  $75,000 was borrowed early in
fiscal  1996.  Additionally,  at  September  30, 1996 and 1995 the Company had a
$100,000  promissory note outstanding under the same terms as the line-of-credit
agreement.  On January 2, 1997, the Company  obtained from Trilon an irrevocable
commitment  to extend the  maturity  date of these  notes from August 8, 1996 to
August 8, 2000, at an interest rate of prime plus 4% per annum.  See Notes 8 and
11 of the Notes to Financial  Statements for a full  discussion of the Company's
outstanding indebtedness.

Pursuant to a certain credit  agreement,  dated as June 28, 1996, Trilon and the
Company  entered into a new $1,611,000  bridge  financing  agreement.  Under the
terms of the agreement,  interest is payable on the principal amount of the debt
at prime plus 4%, payable  quarterly,  beginning in June 1997.  During the first
year,  the Company has the option to  capitalize  the  interest to the  existing
principal. The principal and any unpaid interest is due on June 28, 1999, unless
the Company  completes a public or private  sale of its common  stock in certain
minimum amounts,  in which case the Company is required to prepay part or all of
such debt with the proceeds.  This agreement is  collateralized by substantially
all assets of the





                                      -17-


Company.  Trilon, in connection with this agreement,  was also granted a warrant
to purchase  14,226,578  shares of common stock at an exercise price of $.01 per
share,  as  described  further  in Note 5 of the Notes to  Financial  Statements
included herein.

Also,  during fiscal 1996 the Company obtained  advances from Trilon totaling an
additional  $1,048,000 as of September 30, 1996.  These advances accrue interest
at a rate of 12.25% per annum.  On January 2, 1997,  the Company  obtained  from
Trilon  an  irrevocable  commitment  to  enter  into a credit  agreement,  which
provides for maximum  borrowings of  $2,200,000.  Included in this amount is the
aforementioned  $1,048,000.  Subsequent  to  September  30,  1996,  the  Company
received advances on the remaining  $1,152,000  commitment.  Trilon's commitment
letter  specifies a maturity  in 1998,  interest at prime plus 4% and a grant to
Trilon of an unspecified  number of warrants to purchase shares of the Company's
common stock. See Notes 8 and 11 of the Notes to Financial Statements for a full
discussion of the Company's outstanding indebtedness.

During the year ended  September  30, 1995,  interest of $54,493 due to Dominion
was paid by the issuance of 54,493 shares of common  stock,  at $1.00 per share,
in lieu of a cash  payment.  No interest  was paid during 1996 and, at September
30,  1996,  the  Company  owed  Trilon  $246,047  in  accrued  interest  on  its
outstanding debt.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

3.1      Articles of Incorporation, as amended
3.2      By-Laws
10.1*    Credit Agreement, dated as of June 28, 1996, by and between the Company
         and Trilon Dominion  Partners,  L.L.C.,  a Delaware  limited  liability
         company ("Trilon")
10.2*    Promissory  Note, dated as of June 28, 1996, by the Company in favor of
         Trilon
10.3*    Warrant to Purchase  14,226,578  shares of the Company's  common stock,
         dated June 28, 1996, granted to Trilon
10.4     Commitment Letter,  dated January 2, 1997, by Trilon to loan $2,200,000
         to the Company
10.5     Commitment  Letter,  dated  January  2,  1997,  by Trilon to extend the
         maturity date of the Company's $1,000,000 secured promissory note
10.6     Shepherd Surveillance Solutions, Inc. 1996 Stock Option Plan
16*      Letter,  dated  November 26, 1996,  from James Moore & Co.,  P.L.,  the
         Company's former certifying accountant,  to the Securities and Exchange
         Commission regarding the change in the Company's certifying accountant
27       Financial Data Schedule






                                      -18-


*        Incorporated  by the  reference  to the same  numbered  Exhibits to the
         Company's  quarterly  report for the period ended March 31, 1996, filed
         on Form 10-QSB.

(b)      Reports on Form 8-K

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

                                   SIGNATURES

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

                                                     SHEPHERD SURVEILLANCE 
                                                     SOLUTIONS, INC.



Date:  January 13, 1997                              By:/s/ M. Thomas Makmann
                                                        ------------------------
                                                        M. Thomas Makmann
                                                        Chief Executive Officer 
                                                        and Principal Financial 
                                                        Officer



Date:  January 13, 1997                             /s/ M. Thomas Makmann
                                                    --------------------------
                                                    M. Thomas Makmann
                                                    Director, CEO, Principal
                                                    Financial Officer and 
                                                    Principal Accounting Officer



Date:  January 13, 1997                             /s/ Ronald W. Cantwell
                                                    --------------------------
                                                    Ronald W. Cantwell
                                                    Director

















                           Form 10-KSB - Annual Report


                                     Item 7


                              Financial Statements




                          Year Ended September 30, 1996



                      Shepherd Surveillance Solutions, Inc.
                            7 Perimeter Road, Suite 4
                         Manchester, New Hampshire 03103






                         Report of Independent Auditors


Board of Directors and Shareholders
Shepherd Surveillance Solutions, Inc.

We  have  audited  the  accompanying  balance  sheet  of  Shepherd  Surveillance
Solutions,  Inc.  as of  September  30,  1996,  and the  related  statements  of
operations,  shareholders deficit, and cash flows for the year then ended. These
financial  statements are the  responsibility  of the Companys  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial  position  of  Shepherd   Surveillance
Solutions, Inc. at September30,  1996, and the results of its operations and its
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  As more fully  described in Note 2 to
the  financial  statements,  the  Company  has  incurred  recurring  losses from
operations and has a shareholders  deficit.  These conditions raise  substantial
doubt about the  Companys  ability to continue as a going  concern.  Managements
plans in regard to these  matters are also  described in Note 2 to the financial
statements.  The 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
outcome of this uncertainty.


                                             /s/ ERNST & YOUNG LLP

                                             Ernst & Young LLP

Manchester, New Hampshire
December 12, 1996,
   except for Note 11, as to which
   the date is January 2, 1997


                                                                               1



                         (JAMES MOORE & CO. LETTERHEAD)




               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




To the Board of Directors and Shareholders
     of Shepherd Surveillance Solutions, Inc.:


            We  have  audited  the   accompanying   statements  of   operations,
shareholders' deficit, and cash flows of Shepherd Surveillance  Solutions,  Inc.
(formerly known as InVision  Technology,  Inc.) for the year ended September 30,
1995.  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 audit.

            We  conducted  our  audit  in  accordance  with  generally  accepted
auditing  standards.  Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

            In our opinion,  the financial  statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flows of
Shepherd Surveillance Solutions,  Inc. for the year ended September 30, 1995, in
conformity with generally accepted accounting principles.

            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 has suffered recurring losses from operations
and has a net working capital deficiency that raises substantial doubt about its
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also described in Note 2 to the financial  statements.  The ultimate
outcome of these uncertainties cannot presently be determined.  Accordingly,  no
adjustments have been made in the accompanying financial statements.


                                                  /s/ James Moore & Co.
                                                  ---------------------------
                                                  James Moore & Co.


Holly Hill, Florida
January 31, 1996




                      Shepherd Surveillance Solutions, Inc.

                                  Balance Sheet

                               September 30, 1996



ASSETS (Note 8)
Current assets:
   Cash and cash equivalents                                            $116,770
   Accounts receivable, less allowance for doubtful accounts
     of $5,000                                                            62,786
   Inventories (Note 3)                                                  370,999
   Prepaid expenses and other current assets                              30,122
                                                                        --------
Total current assets                                                     580,677

Property and equipment:
   Furniture and equipment                                               139,283
   Software and hardware (Note 4)                                         36,453
   Leasehold improvements                                                 40,807
                                                                        --------
                                                                         216,543
   Accumulated depreciation and amortization                              63,590
                                                                        --------
                                                                         152,953

Other assets                                                               6,720
                                                                        --------
Total assets                                                            $740,350
                                                                        ========


2








LIABILITIES AND SHAREHOLDERS' DEFICIT
 CURRENT LIABILITIES:
   Accounts payable                                                $    244,449
   Accrued expenses                                                      52,096
   Interest payable to shareholder (Note 8)                             246,047
                                                                    -----------
Total current liabilities                                               542,592

Notes payable to shareholder (Note 8)                                 3,659,000

Lease commitments (Note 7)

Shareholders' deficit (Notes 5, 8, 10 and 11):
  Common Stock, $.001 par value:
     50,000,000 shares authorized
     4,293,822 shares issued and outstanding                              4,294
   Additional paid-in capital                                         5,770,330
   Accumulated deficit                                               (9,235,866)
                                                                    -----------
Total shareholders' deficit                                          (3,461,242)
                                                                    -----------
Total liabilities and shareholders' deficit                         $   740,350
                                                                    ===========



See accompanying notes.



                                                                               3


                      Shepherd Surveillance Solutions, Inc.

                            Statements of Operations



                                                      YEAR ENDED SEPTEMBER 30
                                                        1996             1995
                                                    ----------------------------

Net revenues (Note 9)                                $   656,708    $   149,225

Cost of revenues                                         578,352        145,783
                                                     --------------------------
                                                          78,356          3,442

Costs and other operating expenses:
   General and administrative                            802,547        642,766
   Selling and promotion                                 808,779        660,373
   Research and development                              497,176        112,034
   Loss on holding inventory                                --          310,636
   Depreciation and amortization                          16,124        171,085
                                                    ---------------------------
Total costs and other operating expenses               2,124,626      1,896,894
                                                    ---------------------------

Loss from operations                                  (2,046,270)    (1,893,452)

Other income (expense):
   Interest expense (Note 8)                            (227,011)       (89,623)
   Loss on abandonment of assets                         (50,251)       (86,702)
   Gain on litigation settlement (Note 8)                456,384           --
   Loss on impairment of long-lived assets                  --          (37,585)
   Loss on contract termination (Notes 8 and 10)            --         (110,577)
   Gain on lease termination                                --           20,677
   Other - net                                           (10,369)         5,821
                                                     --------------------------
Total other income (expense)                             168,753       (297,989)
                                                     --------------------------
Net loss                                             $(1,877,517)   $(2,191,441)
                                                     ==========================

Net loss per share                                   $      (.43)   $      (.44)
                                                     ==========================



See accompanying notes.


                                                                               4



                      Shepherd Surveillance Solutions, Inc.

                       Statements of Shareholders' Deficit




<TABLE>
<CAPTION>
                                                                            Additional
                                                    Common Stock             Paid-In       Accumulated
                                             -----------------------------
                                                 Shares        Amount        Capital         Deficit           Total
                                             -----------------------------------------------------------------------------

<S>                                           <C>               <C>       <C>           <C>               <C>         
Balance at September 30, 1994                   3,048,412         $3,049    $3,066,975    $(5,166,908)      $(2,096,884)

   Issuance of common stock (Note 8)            2,704,600          2,704     2,701,896              -         2,704,600

   Net loss                                             -              -             -     (2,191,441)       (2,191,441)
                                             -----------------------------------------------------------------------------
Balance at September 30, 1995                   5,753,012          5,753     5,768,871     (7,358,349)       (1,583,725)

   Retirement of common stock (Note 10)         (1,459,190)       (1,459)        1,459              -                 -

   Net loss                                             -              -             -      (1,877,517)      (1,877,517)
                                             -----------------------------------------------------------------------------
Balance at September 30, 1996                   4,293,822         $4,294    $5,770,330     $(9,235,866)     $(3,461,242)
                                             =============================================================================

</TABLE>


See accompanying notes.


                                                                               5




                      Shepherd Surveillance Solutions, Inc.

                            Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                             YEAR ENDED SEPTEMBER 30
                                                                            1996                 1995
                                                                    ------------------------------------------
<S>                                                                      <C>                  <C>         
OPERATING ACTIVITIES
Net loss                                                                 $(1,877,517)         $(2,191,441)
Adjustments to reconcile net loss to net cash used in operating
   activities:
     Depreciation and amortization (including, for 1995,
       allocation to selling and promotion, and research and
       development)                                                           16,124              228,641
     Non-cash interest (Note 8)                                              227,011               54,493
     Loss on abandonment of assets                                            50,251               86,702
     Gain on litigation settlement (Note 8)                                 (456,384)                   -
     Loss on impairment of long-lived assets                                       -               37,585
     Other                                                                     5,000                  923
     Changes in operating assets and liabilities:
       Accounts receivable                                                    59,148              (87,822)
       Inventories                                                          (115,651)              33,134
       Prepaid expenses and other current assets                             (17,273)               6,939
       Accounts payable                                                      108,006              102,597
       Accrued expenses                                                       52,096              (26,623)
       Accrued loss on open contracts                                        (48,257)              48,257
       Deferred revenue                                                     (265,993)              71,912
       Deferred revenue on shipments to distributors                        (125,420)             125,420
       Due to officer (Note 8)                                              (110,577)             110,577
       Accrued officers' salaries                                                  -              (95,278)
       Interest payable to shareholder                                             -               19,036
       Accounts payable to officers                                                -               (1,267)
       Other assets                                                           (5,031)               8,114
                                                                    ------------------------------------------
Net cash used in operating activities                                     (2,504,467)          (1,468,101)

INVESTING ACTIVITIES
Purchase of property and equipment                                          (130,978)             (62,007)
Sale of property and equipment                                                     -                3,900
                                                                    ------------------------------------------
Net cash used in investing activities                                       (130,978)             (58,107)

FINANCING ACTIVITIES
Loans from shareholder                                                     2,734,000            1,500,000
Proceeds from exercise of stock options                                            -                  107
                                                                    ------------------------------------------
Net cash provided by financing activities                                  2,734,000            1,500,107
                                                                    ------------------------------------------

Net increase (decrease) in cash and cash equivalents                          98,555              (26,101)
Cash and cash equivalents at beginning of year                                18,215               44,316
                                                                    ------------------------------------------
Cash and cash equivalents at end of year                                $    116,770        $      18,215
                                                                    ==========================================

</TABLE>

                                                                               6



                      Shepherd Surveillance Solutions, Inc.

                      Statements of Cash Flows (continued)

<TABLE>
<CAPTION>


                                                                             YEAR ENDED SEPTEMBER 30
                                                                            1996                 1995
                                                                    ------------------------------------------
<S>                                                                      <C>                 <C>        
Supplemental disclosure of cash flow information:
   Cash paid during the year for interest                                       -         $    16,094

Supplemental schedule of non-cash investing and financing activities:
     Issuance of common stock in lieu of cash payment on
       debt (Note 8)                                                            -         $ 2,650,000
     Issuance of common stock in lieu of cash payment for interest
       (Note 8)                                                                 -         $    54,493
</TABLE>



See accompanying notes.


                                                                               7



                      Shepherd Surveillance Solutions, Inc.

                          Notes to Financial Statements

                               September 30, 1996



1. ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Shepherd Surveillance Solutions, Inc. (formerly, InVision Technology, Inc.) (the
"Company") adopted its name in May 1996. The Company was originally incorporated
under the name  IMProCOM,  Inc.  in 1985 and,  until  1996,  was  engaged in the
design,  development,  and production of large  customized  security  management
systems  for  customers  in  the  United   States.   During  1996,  the  Company
transitioned into a developer of fully-integrated  security solutions based on a
PC system and started selling its line of new products  through channels such as
dealers and distributors in the United States, Europe and the Pacific Rim.

The Company operates  primarily in the security  industry.  Any negative factors
generally influencing this market segment could have a materially adverse effect
on the Company.

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  amounts  reported in the financial  statements and  accompanying  notes.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents  include cash on
hand and bank demand deposit accounts with maturities of three months or less at
the time of purchase.

CONCENTRATION OF CREDIT RISK

The Company  provides  credit to  customers  in the normal  course of  business,
generally without requiring  collateral.  It performs ongoing credit evaluations
of its customers and maintains  allowances for potential credit losses. Any such
losses have been within the range of management's expectations.


                                                                               8


                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





1. ACCOUNTING POLICIES (CONTINUED)

INVENTORY

Inventory is stated at the lower of cost, determined on the first-in,  first-out
basis, or market.

PROPERTY AND EQUIPMENT

Property and  equipment are stated at cost.  Depreciation  and  amortization  is
provided for financial  reporting  purposes using the straight-line  method over
estimated useful lives of 1 to 5 years.

REVENUE RECOGNITION

Revenue is generally  recognized upon shipment.  Where rights of return exist at
the time of sale,  revenue is recognized  only when conditions set forth in SFAS
No. 48,  "Revenue  Recognition  When Right of Return  Exists",  are met, or when
rights of return have expired.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying  amounts  reported in the balance sheet for the Company's  cash and
cash equivalents and borrowings approximate their fair value.

NET LOSS PER SHARE

Net loss per share is computed  based on the weighted  average  number of common
shares outstanding during the respective years:  4,364,296 in 1996 and 4,974,900
in 1995.

STOCK-BASED COMPENSATION

The Company  grants stock options for a fixed number of shares to employees with
an exercise  price  equal to the fair value of shares at the date of grant.  The
Company  accounts for stock option grants in accordance with APB Opinion No. 25,
"Accounting  for Stock Issued to  Employees",  and intends to continue to do so.
Accordingly, no compensation expense is recognized for stock option grants.



                                                                               9


                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





1. ACCOUNTING POLICIES (CONTINUED)

FOURTH QUARTER ADJUSTMENTS

The Company made  adjustments to its financial  statements in the fourth quarter
of fiscal 1996,  including an inventory write-off of approximately  $314,000 and
recognizing  a loss of  approximately  $50,000 on  abandonment  of certain fixed
assets.

NEW ACCOUNTING STANDARD

In  October  1995,  Statement  of  Financial  Accounting  Standard  No.  123,  "
Accounting for Stock-Based Compensation," was issued which prescribes accounting
and reporting  standards for all stock-based  compensation plans. Under SFAS No.
123, companies are encouraged,  but not required, to adopt the fair value method
of  accounting  for such plans.  Companies  can continue to follow the intrinsic
value  method of  accounting  under APB  Opinion  No.  25, but are  required  to
disclose the pro-forma  information  regarding  stock-based  compensation  plans
under the fair value  method  required  by SFAS No.  123.  The  Company  will be
required to adopt the SFAS No. 123 disclosures in fiscal 1997.

2. GOING CONCERN

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going concern.  The Company has experienced  substantial  operating
losses for the past several years and, as of September 30, 1996, the Company has
a  shareholders'  deficit  of  $3,461,242.  In  addition,  the  Company's  sales
currently do not generate  working capital  sufficient to meet future  operating
requirements.  These factors indicate that the Company may be unable to continue
as a going concern.  The 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.

The Company's  ability to continue in operation is dependent upon its ability to
generate a significant increase in sales volume of its new products, its ability
to  obtain  the  financing  necessary  to  fund  its  expanded  operations  and,
ultimately,  its ability to achieve profitable operations. At present, it is not
possible to determine the ultimate outcome of these matters.


                                                                              10


                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





3. INVENTORIES

Inventories consist of the following at September 30, 1996:

         Raw materials                            $178,999
         Work-in-progress                           13,286
         Finished goods                            178,714
                                                ----------
                                                  $370,999
                                                ==========

During 1996, the Company  wrote-off  inventory of approximately $ 314,000.  This
was a consequence  of the  Company's  redesign of product  models,  resulting in
reengineered components for production units. Accordingly, all materials used in
production models of prior years were written off in 1996.

4. CAPITALIZED SOFTWARE AND HARDWARE

Prior to 1995, certain software and hardware  modification and enhancement costs
developed by the Company were  capitalized.  During the year ended September 30,
1995,  the estimated  useful lives of these assets were revised to reflect their
inability to generate  significant  revenue.  Amortization  and  depreciation of
these costs,  included in  depreciation  and  amortization  expense for the year
ended September 30, 1995, was $132,593.  At September 30, 1995, these assets had
a net book value of $0.


During 1996, the Company did not capitalize any software costs. All research and
development expenditures are charged to operations as incurred.

5. Stock Options and Warrants

Prior to 1995,  executives  were  granted  options  to  purchase  shares  of the
Company's  common  stock at a range of $.25 to $1.00 per  share.  The  1,264,893
options  outstanding  at  September  30,  1995 were  conveyed to the Company and
cancelled on October 17, 1995, as part of a settlement of litigation between the
Company and certain former executives (see Note 10).


                                                                              11



                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





5. STOCK OPTIONS AND WARRANTS (CONTINUED)

On September  30, 1996,  the Company  adopted the 1996 Stock Option Plan,  which
provides  for  options  to be  granted  to  employees  for the  purchase  of the
Company's common stock. Pursuant to the Plan, the Company has reserved 5,297,714
shares for  issuance of options.  As of September  30,  1996,  options have been
granted to purchase 4,238,168 shares at an exercise price of $.01 per share, the
estimated  fair market value of the shares at the date of grant.  Options become
exercisable  based on  holding  periods  after the grant  date and,  in  certain
instances,  on other  criteria  relating to the  operations  of the Company.  At
September 30, 1996, no options are exercisable.

Additionally,  in connection with the bridge  financing  agreement  described in
Note 8, the majority  shareholder  was granted a warrant to purchase  14,226,578
shares of common  stock at an exercise  price of $.01 per share,  the  estimated
fair market value per share at the date of grant.  The warrant  expires June 28,
2001.

Outstanding warrants and options are summarized as follows:

                                                    WARRANTS        OPTIONS
                                                 -------------------------------

     Outstanding at September 30, 1994              2,762,200      1,265,000
     Expired                                         (112,200)             -
     Exercised (at $1.00 per share)                (2,650,000)          (107)
                                                 -------------------------------
     Outstanding at September 30, 1995                      -      1,264,893
     Cancelled                                              -     (1,264,893)
     Granted                                       14,226,578      4,238,168
                                                 ===============================
     Outstanding at September 30, 1996             14,226,578      4,238,168
                                                 ===============================

During the year ended September 30, 1995,  2,650,000  warrants were exercised as
described in Note 8. No options or warrants were exercised during the year ended
September 30, 1996.



                                                                              12


                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





6. Income Taxes

The Company  accounts  for income  taxes  according  to  Statement  of Financial
Accounting  Standards No. 109, "Accounting for Income Taxes", which requires the
recognition of deferred  income taxes for the  difference  between the financial
statement and tax bases of assets and liabilities,  utilizing current tax rates.
Valuation  allowances  are  established  to reduce any deferred tax assets to an
amount that will more likely than not be realized.

The Company has net operating loss carryforwards of approximately  $2,100,000 at
September 30, 1996 for federal  income tax purposes.  These  carryforwards  will
begin to expire in fiscal year 2011.

Components of the Company's deferred tax assets and liabilities at September 30,
1996 are as follows:

Deferred tax assets:
  Net operating loss carryforwards                      $733,000
  Interest payable to shareholder                         86,000
  Other                                                    5,000
                                                 --------------------
Deferred tax assets                                      824,000

Deferred tax liabilities:
  Depreciation                                            (4,000)
                                                 --------------------
Net deferred tax assets                                  820,000
Valuation allowance                                     (820,000)
                                                 --------------------
                                                  $         -
                                                 ====================

The net change in the valuation  allowance for the year ended September 30, 1996
was a decrease of $228,900  due to the change in the  composition  of  temporary
differences.



                                                                              13



                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





7. OPERATING LEASES

Rent  expense  in  fiscal  years  1996 and 1995 was  approximately  $84,000  and
$133,000,  respectively.  Throughout  most of fiscal  1996,  the Company  leased
office  space and  equipment on a  month-to-month  basis.  In August  1996,  the
Company  executed a five-year lease for office,  engineering  and  manufacturing
space. Future minimum commitments under noncancelable operating leases are:

1997                                                       $    40,000
1998                                                            42,000
1999                                                            43,000
2000                                                            45,000
2001 and thereafter                                             47,000
                                                       ------------------
                                                              $217,000
                                                       ==================

8. RELATED PARTY TRANSACTIONS

LOANS FROM SHAREHOLDER

During the year ended  September  30,  1995,  the  majority  shareholder  of the
Company  exercised a warrant for 2,650,000  shares of the Company's common stock
pursuant to its existing line-of-credit  agreement with the Company. The warrant
was  exercisable by its terms at $1.00 per share. In lieu of paying the exercise
price in cash, the majority  shareholder  converted its outstanding  loan to the
Company, in the amount of $2,650,000, to common stock.

During the year ended September 30, 1995, the majority  shareholder  amended its
line-of-credit agreement with the Company to provide a total of $900,000 to draw
on for operations. At September 30, 1995, the Company had borrowings of $825,000
outstanding  under this agreement.  The remaining  $75,000 was borrowed early in
fiscal 1996,  with total  borrowings  of $900,000  outstanding  at September 30,
1996.  Additionally,  at September 30, 1996 and 1995, the Company had a $100,000
promissory  note  outstanding  under  the  same  terms  as  the   line-of-credit
agreement.  Borrowings under both of these  agreements had a scheduled  maturity
date of August 8, 1996 (see Note 11).



                                                                              14



                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





8. RELATED PARTY TRANSACTIONS (CONTINUED)

In June 1996,  the  majority  shareholder  and the  Company  entered  into a new
$1,611,000  bridge  financing  agreement.  Under  the  terms  of the  agreement,
interest  is  payable  on the  principal  amount  of the debt at prime  plus 4%,
payable  quarterly,  beginning in June 1997.  During the first year, the Company
has the  option to  capitalize  the  interest  to the  existing  principal.  The
principal  and any unpaid  interest  is due on June 28,  1999 unless the Company
completes  a public or  private  sale of its  common  stock in  certain  minimum
amounts,  in which case the  Company is  required  to prepay part or all of such
debt with the proceeds.  This agreement is  collateralized  by substantially all
assets  of the  Company.  The  majority  shareholder,  in  connection  with this
agreement,  was also granted a warrant to purchase  14,226,578  shares of common
stock at an exercise price of $.01 per share, as described in Note 5.

Additionally,  during  fiscal  1996,  the  Company  obtained  advances  from the
majority shareholder totaling an additional  $1,048,000 as of September 30, 1996
(see Note 11). These advances accrue interest at a rate of 12.25%.

During  the year ended  September  30,  1995,  interest  of  $54,493  due to the
majority  shareholder was paid by the issuance of 54,493 shares of common stock,
at $1.00 per share, in lieu of a cash payment.  No interest was paid during 1996
and, at September 30, 1996, the Company owed the majority  shareholder  $246,047
in accrued interest on its outstanding debt.

ACCRUED SALARIES

Prior to 1995,  a former  executive of the Company  elected to  partially  defer
certain  salary  obligations  of the  Company.  Total  deferred  salaries  as of
September  30, 1995 was  $456,384.  On October 17, 1995, as part of a litigation
settlement,  as described in Note 10, the Company was released of its obligation
to pay this  liability  and recorded  the release of the deferred  salaries as a
gain on litigation settlement.



                                                                              15



                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





8. RELATED PARTY TRANSACTIONS (CONTINUED)

DUE TO OFFICER

Prior to 1995,  the  Company  executed  an  employment  agreement  with its then
president.  On October 17, 1995, as part of a litigation settlement described in
Note 10, the Company was  released of any  commitments  to the former  president
under the employment  agreement and,  thereby,  incurred an expense of $110,577.
This amount was accrued in the financial statements as of September 30, 1995 and
paid to the former president during the first quarter of fiscal 1996.

9. SIGNIFICANT CUSTOMERS

During  fiscal  1995 and for most of  fiscal  1996,  a  significant  part of the
Company's  business was derived from a small number of  customers.  For the year
ended  September  30, 1995,  approximately  68% of the  Company's  revenues were
attributable   to  three   customers  (27%,  22%  and  19%  of  total  revenues,
respectively).  For the year ended  September  30,  1996,  approximately  79% of
revenues  were  attributable  to  three  customers  (38%,  29% and 12% of  total
revenues, respectively).

10. LITIGATION AND SETTLEMENT AGREEMENT

In February 1995,  litigation was  instituted by former  executives  against the
Company, the majority  shareholder,  and three members of the Company's Board of
Directors.

On October 17, 1995, the Company and its former  president agreed to release one
another from all commitments arising out of an employment agreement. In exchange
for the  Company  terminating  the  agreement,  the former  president  agreed to
forfeit  to the  Company  his 107  shares  of the  Company's  common  stock  and
outstanding  options to  purchase  an  additional  64,893  shares.  The  release
resulted in an expense to the Company of  $110,577.  A provision of $110,577 was
charged to operations for the year ended September 30, 1995.



                                                                              16


                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





10. Litigation and Settlement Agreement (continued)

On October 17, 1995,  the terms of a  settlement  agreement  with the  Company's
former CEO, dated September 5, 1995, were satisfied, resulting in the forfeiture
by the  former  CEO of  1,459,083  shares  of the  Company's  common  stock  and
cancellation of options to purchase an additional 1,200,000 shares of stock. The
former CEO also agreed to release a claim for deferred  salary,  as described in
Note 8, which was recorded by the Company as a gain in fiscal 1996.

11. Subsequent Event

On January 2, 1997, the Company obtained an irrevocable commitment to enter into
a credit  agreement  with the majority  shareholder  which  provides for maximum
borrowings of $2,200,000.  Included in this amount are advances  received by the
Company  aggregating  $1,048,000 during fiscal 1996 (see Note 8) and outstanding
at September 30, 1996.  Subsequent to September 30, 1996,  the Company  received
advances on the remaining $1,152,000 under the commitment. The commitment letter
specifies  a maturity  in 1998 and  interest  at prime  plus 4%. The  commitment
letter  also  requires  the  Company  to grant to the  majority  shareholder  an
unspecified number of warrants.

On January 2, 1997, the Company also obtained an irrevocable commitment from the
majority shareholder to extend the maturity date on the $1,000,000 of promissory
notes due to the majority  shareholder  at September  30, 1996 (see Note 8) from
August 8, 1996 to August 8, 2000 at an interest rate of prime plus 4%.

As a result of the  Company  obtaining  the  aforementioned  commitment  letters
specifying  maturity dates on the  borrowings  which extend beyond one year, the
$1,048,000 and $1,000,000 outstanding at September 30, 1996 have been classified
as non-current liabilities on the balance sheet.


                                                                              17




                      Shepherd Surveillance Solutions, Inc.

                    Notes to Financial Statements (continued)





12. Restatement of Quarterly Financial Information (Unaudited)

As disclosed in Notes 8 and 10, the Company executed a settlement agreement with
its former CEO on October 17, 1995. Among other things,  the agreement  provided
for the release by the former CEO of a claim for deferred  salaries  aggregating
$456,384,  which was  accrued as a  liability  at  September  30,  1995.  In its
Quarterly  Reports on Form 10-QSB for December 31, 1995, March 31, 1996 and June
30, 1996, the Company's financial  statements  reflected the release of deferred
salaries as Additional  Paid-In Capital.  While preparing its September 30, 1996
financial  statements,  the Company  determined  that it is more  appropriate to
record the  $456,384 as a Gain on  Litigation  Settlement  in the  Statement  of
Operations. The effect on reported quarterly financial data follows:

                                     FIRST           SECOND          THIRD
                                    QUARTER         QUARTER         QUARTER
                               ------------------------------------------------
As reported:
   Additional paid-in capital       $6,226,714     $6,226,714     $6,226,714
   Other income (expense)              (26,185)       (35,795)       (44,129)
   Net (loss)                         (210,662)      (257,094)      (729,826)
   Net (loss) per share                  (.05)          (.06)          (.17)

As restated:
   Additional paid-in capital       $5,770,330     $5,770,330     $5,770,330
   Other income (expense)              430,199        (35,795)       (44,129)
   Net income (loss)                   245,722       (257,094)      (729,826)
   Net income (loss) per share            .05           (.06)          (.17)






                                                                              18