NEW COLOMBIA RESOURCES INC - FORM 10-K

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EX-31 - EX. 31.1 SECTION 302 CERTIFICATION - NEW COLOMBIA RESOURCES INC	vsus10k123109ex311.htm
EX-32 - EX. 32.1 SECTION 906 CERTIFICATION - NEW COLOMBIA RESOURCES INC	vsus10k123109ex321.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

___________

FORM 10-K

(Mark One)


X .	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009


.	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number 333-51274

VSUS TECHNOLOGIES INCORPORATED

(Name of small business issuer in its charter)


Delaware		43-2033337
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)


18565 Soledad Canyon Rd., #153,Canyon Country, CA		91351
(Address of principal executive offices)		(Zip Code)

(310) 309-9080

Issuer's telephone number

____________________________________________________

(Former Name and Former Address, if Changed since Last Report)

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock

(Title of class)

Check whether the issuer (1) 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. X . Yes . No

Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not 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-K or any amendment to this Form 10-K. X .

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). . .Yes X . No

The issuer had no revenues for its most recent fiscal year.

As of March 24, 2010, the aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the closing price of such common equity on the OTC Bulletin Board, and was approximately $6,566,702. There are approximately 56,000 shares of Common Stock of the issuer not held by affiliates.

As of March 24, 2010, the number of shares of the issuer’s Common Stock outstanding was 6,566,702.

DOCUMENTS INCORPORATED BY REFERENCE

A description of “Documents Incorporated by Reference” is contained in Item 13 of this Report.

Transitional Small Business Issuer Format (check one): .Yes X .No

ANNUAL REPORT ON FORM 10-K

OF VSUS TECHNOLOGIES INCORPORATED

TABLE OF CONTENTS


	Page
Cautionary Notice Regarding Forward-Looking Statements	4
PART I	4
Item 1. Description of Business	4
Item 2. Description of Property	14
Item 3. Legal Proceedings	14
Item 4. Submission of Matters to a Vote of Security Holders	14
PART II	15
Item 5. Market for Common Equity and Related Stockholder Matters	15
Item 6. Management’s Discussion and Analysis or Plan of Operation	15
Item 7. Financial Statements	17
Contents	F-1
Consolidated Balance Sheets	F-3
Consolidated Statement of Operations	F-4
Consolidated Statements of Changes in Shareholders’ Deficiency	F-5
Consolidated Statements of Cash Flows	F-7
Notes to the Consolidated Financial Statements.	F-8
Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	18
Item 8A. Controls and Procedures	18
Item 8B. Other Information	18
PART III	19
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of Exchange Act	19
Item 10. Executive Compensation	20
Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	21
Item 12. Certain Relationships and Related Transactions	21
Item 13. Exhibits	22
Item 14. Principal Accountant Fees and Services	22
Signatures	22

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements that we make in this report. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements. This report contains statements that constitute “forward-looking statements.” These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,” “anticipates,” “expects,” “estimates,” “plans,” “may,” “will,” or similar terms. These statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations with respect to many things. Some of these things are:

trends affecting our financial condition or results of operations for our limited history;

our business and growth strategies;

our technology;

the Internet; and

our financing plans.

We caution readers that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. In fact, actual results most likely will differ materially from those projected in the forward-looking statements as a result of various factors. Some factors that could adversely affect actual results and performance include:

our limited operating history;

our lack of sales to date;

our future requirements for additional capital funding;

the failure of our technology and products to perform as specified;

the discontinuance of growth in the use of the Internet;

our failure to integrate certain acquired businesses with our business;

the enactment of new adverse government regulations; and

the development of better technology and products by others.

You should carefully consider and evaluate all of these factors. In addition, we do not undertake to update forward-looking statements after we file this report with the Securities and Exchange Commission, even if new information, future events or other circumstances have made them incorrect or misleading.

PART I

Item 1. Description of Business.

Business Overview

VSUS Technologies, Inc. (“VSUT”) is a next generation Intranet system. Its state of the art communication platform enhances traditional e-mail, document storage and instant messaging applications by delivering them via a secure network to end users either at their desktops, to their fax machines, or on the road, to their mobile phone or other wireless device by Short Message Service (SMS) or Multimedia Messaging Service (MMS). VSUS Technologies specializes in internet social working sites, where members of certain social networks can cross pollinate with other current social network sites. Recently the company has been entertaining many prospective business’s, and plans to expand in the near future. VSUS Technologies, Inc.’s proprietary system also provides a means for advertisers to reach their coveted demographics. This occurs by insertion of banner, and other advertisements, in the information distributed. In a win-win situation, users get useful and relevant information and advertisers deliver their message to their target audience.

As the Internet Social Networks continue to grow, we expect to break into this great field and expand our business and our technology. We have signed an LOI with the company ZenZuu, an up and coming social site. We plan on furthering our hunt for the absolute right fit into our business plan, and expanding our business model.

Our Corporate History

VSUS Technologies Incorporated (“the Company”) was incorporated in Delaware on September 20, 2000. Following its establishment, the Company organized, at the end of 2000, two wholly-owned subsidiaries: Safe Mail International Ltd., a company registered in the British Virgin Islands and Safe Mail Development Ltd., a company registered in Israel. As of August 31, 2004, the Company established two additional wholly-owned subsidiaries: VSUS Secured Services, Inc., a Delaware corporation and First Info Network, Inc., a Delaware corporation. Since inception, and until a recent shift in the focus of its business operations, the Company had been a developer and marketer of highly secure communications systems for use over the Internet.

Effective as of April 13, 2005, the Company reorganized its business by transferring substantially all of its business assets into VSUS Secured Services, Inc., its wholly-owned subsidiary. Consequently, its two subsidiaries, Safe Mail Development Ltd. and Safe Mail International Ltd., became subsidiaries of VSUS Secured Services, Inc.

On April 14, 2005, VSUS Technologies Incorporated acquired 1stAlerts, Inc., a Delaware corporation (“1stAlerts”), a company that develops, markets and sells software applications, when 1stAlerts merged with and into the Company's wholly-owned Delaware subsidiary, First Info Network, Inc., hereinafter referred to as the “1stAlerts Acquisition”. At the time of the 1stAlerts Acquisition, among other things: (i) the Company exchanged 13,000,000 shares of its Common Stock, and 200 shares of its Series B Participating Preferred Stock, for all of the issued and outstanding shares of capital stock of 1stAlerts, (ii) the Company issued 1,861,841 of its Class A Warrants in exchange for warrants to purchase shares of Common Stock of 1stAlerts, (iii) the Company assumed $4,565,000 of promissory and convertible notes from 1stAlerts, and (iv) certain officers and directors of 1stAlerts became officers and directors of the Company. The 200 shares of series B Participating Preferred Stock, the 1.861,841 Class A Warrants which were never registered and a portion of the Convertible Notes were cancelled as a part of the June 24, 2009 Rescission Agreement with 1^st Alerts. The Company returned all of the Capitol stock of 1^st Alerts as part of the 2009 Rescission Agreement. No remaining 1^st Alerts Officers and Directors currently serve as Officers or Directors of the Company.

Each of the 1,861,841 Class A Warrants the Company issued in connection with the 1stAlerts Acquisition have a term of a term of two years from the effective date of a registration statement the Company's obligated to file to register, among other of its securities, the shares of the Company's Common Stock underlying these warrants, and an exercise price of $0.19. The class A Warrants and the registration obligation of the company have been negated and cancelled pursuant to the 2009 Rescission Agreement.

1^st Alerts Agreements have all been Rescinded

1st agrees that as consideration for the execution of this Rescission Agreement, it shall: (a) relinquish and forever waive any ownership claim or right to the 13,000,000 shares of VSUT common stock issued to the shareholders of 1^st, or their designees pursuant to the terms of the Acquisition Agreement; including 200 shares of participating preferred shares issued subsequent to the Acquisition Agreement, and (b) to delivered forthwith to VSUT said shares, medallion guaranteed, with a notarized third party release, and notarized corporate resolution from 1st.

Following our acquisition of 1stAlerts, we shifted our business operations to primarily focus on the 1stAlerts business model. In connection with this change, we have terminated our operations in Israel.

In June 2005, we were introduced to NetCurrents Information Services, Inc. (“NetCurrents”), which owns a patented REAL-TIME search engine technology called “FIRST.” Our management believed that incorporating FIRST into the company's MyOneScreen software application would give it a competitive advantage over its competitors. On June 9, 2005, we entered into a strategic relationship with NetCurrents, pursuant to which NetCurrents granted us a 50-year license to modify and integrate NetCurrent’s patented FIRST (Fast Internet Real-Time Search Technology) Internet search technology (the "NetCurrents Technology") into our products.

In March 2006, we entered into a Memo of Understanding with Scientigo, Inc. (“Scientigo”), to integrate their patented TIGO Artificial Intelligence technology with FIRST. Scientigo is an emerging technology company that invented, patented and licenses the next-generation of intelligent document recognition, intelligent enterprise content management and intelligent search technologies. Their patented TIGO technology creates order from chaos by using artificial intelligence, machine learning, rule-based systems and patented XML technology to make it faster, easier and less costly to capture, file, organize and retrieve any type of information.

In March of 2009 we entered into an LOI with My Vintage Baby, Inc. the company was going to acquire a majority interest in MVBY. Due to certain circumstances the company was not able to complete the acquisition. In September 2009 the company signed an LOI with ZenZuu, Inc., a leader in the internet social networking field; the company is in the process of completing that acquisition. The company is also currently seeking, and entertaining businesses with internet technology and other Intellectual properties that fulfill and complete our current business plan.

Overview

1^st Alerts Agreements have all been Rescinded

The Company provides a platform for companies to share documents, presentations, press releases, and critical information with their clients, employees and shareholders, in a completely secure environment. This allows vital information to be disseminated to the people who need it most, in a private and efficient manner.

The Company’s proprietary system also provides a means for advertisers to reach their coveted demographics. This occurs by insertion of banner, and other advertisements, in the information distributed through The Company’s combination of “push” and “pull” technologies. In a win-win situation, users get useful and relevant information and advertisers deliver their message to their target audience.

Configuring a personal computer (PC), or other device, to receive information via The Company’s system is relatively easy, requiring a user to simply download and install The Company’s proprietary software from its Website. Then, the information just shows up.

Through the various packages it offers, utilizing its proprietary technology, The Company enables end users to securely receive and send desired information, companies to communicate efficiently within their virtual communities, and advertisers to effectively target potential customers. The Company entering into and contemplating entering into agreements, and/or acquiring mobile to mobile technology, mobile payment platforms, and data transmission via handheld devices.

Industry Background

The Internet has vastly improved the quality of our lives by placing an unlimited amount of information, literally, at our fingertips. However, most people now find that they spend more time searching for information on the Web than actually using it. Ordinary search engines regularly return an excessive number of hits per query, which makes the search for relevant information about as easy as finding a needle in a haystack.

At the same time, publicly-traded corporations, advertisers, and other entities that desperately need to reach individuals within defined communities, find it virtually impossible to cut through the glut of unnecessary data, and outmaneuver other message-bearers competing for their attention.

But an emerging set of technologies collectively referred to as “push” technology can help, at both ends, by delivering desired information directly to a willing recipient’s desktop, fax machine or wireless device. This evolving distribution technology is substantially changing the way in which users interact with information.

Recognizing the necessity for a system to effectively get useful and relevant information from anxious providers, to willing receivers, The Company developed its proprietary network.

Products and Services

Through the first half of 2005, The Company developed and attempted to market two basic software applications, as follows:

MyOneScreen

"MyOneScreen," is a fully functional web-based application, which can be customized to the user's preference, featuring news updates, weather, a browser, search capabilities, secured email, secured instant messaging (with links to MSN, AOL and ICQ), delayed stock quotes (with charting and portfolio), and a word processor. This product is complete and has been launched in a beta version, which can be downloaded from our secure Website.

In June 2005, we were introduced to NetCurrents Information Services, Inc. (“NetCurrents”), which owns a patented REAL-TIME search engine technology called “FIRST”. Management believed that incorporating FIRST into the company’s MyOneScreen software application would give it a competitive advantage over its competitors. On June 9, 2005, we entered into a strategic relationship with NetCurrents, pursuant to which NetCurrents granted us a 50-year license to modify and integrate NetCurrent’s patented FIRST (Fast Internet Real-Time Search Technology) Internet search technology (the "NetCurrents Technology") into our products. It is anticipated that when development is complete, MyOneScreen will offer users real time Internet search capabilities.

FIRST is an actual search engine, which distinguishes itself in the following ways:

The key features of this technology are protected by two granted U.S. Patents, #6,260,041 (granted July 10, 2001), and #6,332,141 (granted December 18, 2001).

FIRST is a “user specific” search engine and only delivers highly relevant results to the user. For example, typing in “TCP” at a search portal could yield as many hits in medicine (a drug) as in computer science (a protocol). The challenges in ranking (thousands of) results from a user search involve how to identify the proper context (drug or protocol) and how to rank the most relevant results first without duplication. Most search engines approach this ranking issue by analyzing and organizing (clustering) the results of the search, then presenting those first that are more “important” as determined by a page scoring system. FIRST does not use these types of scoring systems, but instead focuses the original search scope to only targeted areas that are likely to contain the most relevant results for the search context. It then uses artificial intelligence to further assess the quality of and rank the results.

Unlike Google or Yahoo that cater to users with broad interests where the “freshness” of results is not a major factor, FIRST is designed to cater to users with specific interests where timeliness of results is the most critical factors.

As currently developed, FIRST is capable of:

Real-time search and data-mining on the World Wide Web;

Cataloguing all retrieved data;

Identification of patterns and correlation of behavior;

Unstructured data categorization and taxonomy classification;

Identification of topics discussed in unstructured text; and

Determining sentiment associated with each topic.

Management believes, that, in the coming months, we will have an operational system available and will be in a position to move forward.

Sales and Marketing Strategy

Currently, The Company’s products are being sold through the following methods:

Direct sales;

Sales through resellers promoting the The Company brand; and

Virally through its secure Website.

In the future, The Company plans to increase its direct marketing and sales efforts and enter into key relationships with sub-licensees, to continue to expand our reach.

Intellectual Property Protection

The Company relies on common law and statutory protection of trade secrets, in addition to confidentiality agreements to protect its intellectual property. In addition, The Company believes, but cannot assure, that its technology and its implementation may be patentable.

The Company cannot assure that it will be able to obtain or to maintain the foregoing intellectual property protection. It also cannot assure that its technology does not infringe upon the intellectual property rights of others. In the event that The Company is unable to obtain the foregoing protection or its technology infringes intellectual property rights of others, its business and results of operations could b e materially and adversely affected. For more information please see “Risk Factors―We may not be able to protect and enforce our intellectual property rights, which could result in the loss of our rights, loss of business or increased costs.”

Employees

The Company’s team currently consists of three (2) employees and several independent contractors. Each management hire has been carefully selected to address immediate needs in particular functional areas, but also with consideration of the Company’s future needs during a period of expected rapid growth and expansion. Value is placed not only on outstanding credentials in specific areas of functional expertise, but also on cross-functionality, collegiality, a strong knowledge of content acquisition and distribution, along with hands-on experience in scaling operations from initial beta and development stage through successful commercial deployment.

Risk Factors

There are many risks that may affect our company or the value of our Common Stock, including those described below. If any of these or other risks actually occur, our business, financial condition and operating results, as well as the trading price or value of our securities could be materially adversely affected and you may lose all or part of your investment.

Risks relating to our business

We are a development stage company, and our limited operating history makes evaluating our business and prospects difficult.

We are a development stage company, and our limited operating history makes it difficult to evaluate our current business and prospects or to accurately predict our future revenues or results of operations. Our revenue and income potential are unproven, and our business plan is constantly evolving. The Internet is constantly changing and software technology is constantly improving. Therefore we may need to continue to modify our business plan to adapt to these changes. As a result of our being in the early stages of development, particularly in the emerging technology industry, we are more vulnerable to risks, uncertainties, expenses and difficulties than more established companies. If we cannot successfully address the risks associated with early stage development companies in emerging technologies, we may never achieve profitability and we may not be able to continue operations.

We have a history of operating losses and we anticipate losses and negative cash flow for the foreseeable future. Unless we are able to generate profits and positive cash flow we may not be able to continue operations.

We expect operating losses and negative cash flow from operations to continue for the foreseeable future and to increase significantly from current levels as we increase expenditures for:

sales and marketing;

technology;

research and development; and

general business enhancement.

With increased on-going operating expenses, we will need to generate significant revenues to achieve profitability. Consequently, we may never achieve profitability. Even if we do achieve profitability, we may not sustain or increase profitability on a quarterly or annual basis in the future. If we are unable to achieve or sustain profitability in the future, we may be unable to continue our operations.

We may require additional capital to proceed with our long-term business plan. If we are unable to obtain such capital in future years, we may be unable to proceed with our long-term business plan and we may be forced to limit or curtail our future operations.

Our auditor has raised doubt about our ability to continue as a going concern

In conjunction with their 2009 year-end audit, our independent accountants have issued an audit opinion with respect to our 2009 consolidated financial statements, which includes an explanatory paragraph describing conditions that raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. We cannot be certain that our business plans will be successful or which actions may become necessary to preserve our business. Any inability to raise capital may require us to reduce operations or could cause our business to fail.

The loss of any of our key personnel would likely have an adverse effect on our business.

Our future success depends, to a significant extent, on the continued services of our key personnel. Our loss of any of these key personnel most likely would have an adverse effect on our business. At present, we have no contractual agreements with any of these personnel. In addition, we do not have key man life insurance on any of these key personnel.

Competition for personnel throughout our industry is intense and we may be unable to retain our current personnel, or attract, integrate or retain other highly qualified personnel in the future. If we do not succeed in retaining our current personnel, or in attracting and motivating new personnel, our business could be materially adversely affected.

The absence of the types of financial controls and procedures required of public companies leave investors in our company without these protections until their absence is remedied.

The Sarbanes-Oxley Act requires public companies to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time required. This includes controls and procedures to ensure that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, so as to allow timely decisions regarding required disclosure of such information. The Sarbanes-Oxley Act also requires documentation of internal control procedures, remediation as needed, and periodic testing of these controls. We are in the process of reviewing our internal controls with a view toward documenting the required controls and procedures, remediating existing deficiencies and adopting a testing plan. This process is in the initial stages. Because these controls are all designed to protect the interests of investors in our securities, without these elements, purchasers of our Common Stock in this offering would lack this protection until their absence is remedied.

Our acquisition of 1stAlerts, Inc. and potential additional future acquisitions could be difficult to integrate and could adversely affect our operating results.

Our operating results may prove unpredictable, and may fluctuate significantly.

Our operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which are outside of our control. Factors which may cause operating results to fluctuate significantly include the following:

new technology or products introduced by us or by our competitors;

the timing and uncertainty of sales cycles and seasonal declines in sales;

our success in marketing and market acceptance of our products and services by our existing customers and by new customers;

a decrease in the level of spending for information technology-related products and services by our existing and potential customers; and

general economic conditions, as well as economic conditions specific to users of our products and technology.

Our operating results may be volatile and difficult to predict. As such, future operating results may fall below the expectations of securities analysts and investors. In this event, the trading price of our Common Stock may fall significantly.

We face governmental regulation and legal uncertainties with respect to our business.

We are not currently subject to regulation by any domestic or foreign governmental agency, other than regulations applicable to businesses generally, and laws or regulations directly applicable to access to online commerce (except as otherwise described in this report). However, due to the increasing popularity and use of the Internet and online services, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, pricing, content, copyrights, distribution and characteristics and quality of products and services. Furthermore, the growth and development of the market for online commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on those companies conducting business online. The adoption of any additional laws or regulations may decrease the growth of the Internet or other online services, which could, in turn, decrease the demand for our products and services, and increase its cost of doing business, or otherwise have a material adverse effect on its business, prospects, financial condition and results of operations. Moreover, the applicability to the Internet and other online services of existing laws in various jurisdictions governing issues such as property ownership, sales and other taxes, libel and personal privacy is uncertain and may take years to resolve. Any such new legislation or regulation, the application of laws and regulations of jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and other online services could have a material adverse effect on our business, financial condition and results of operations.

Permits or licenses may be required from federal, state or local governmental authorities to operate or to sell certain products on the Internet. No assurances can be given that such permits or licenses will be obtainable. We may be required to comply with future national and/or international legislation and statutes regarding conducting commerce on the Internet in all or specific countries throughout the world. No assurance can be made that The Company will be able to comply with such legislation or statutes.

The business environment is highly competitive and, if we do not compete effectively, we may experience material adverse effects on our operations.

The market for our products and services is intensely competitive and has historically been characterized by low financial entry barriers. Therefore, we expect competition to increase in the future. We compete with large and small companies that provide products and services that are similar to some aspects of our products and services. Our competitors may develop new technologies in the future that are perceived as being more secure, effective or cost efficient than the technology underlying our products and services.

Some of our competitors have longer operating histories, greater name recognition, access to larger customer bases and significantly greater financial, technical and marketing resources than we do. As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to the promotion and sale of their products than we will. We believe that there may be increasing consolidation in the Internet software services industry and that this consolidation may materially adversely affect our competitive position. In addition, our competitors may have established or may establish financial or strategic relationships among themselves, or with existing or potential customers, resellers or other third parties, and rapidly acquire significant market share. If we cannot compete effectively, we may experience future price reductions, reduced gross margins and loss of market share, any of which will materially adversely affect our business, operating results and financial condition.

If we are unable to develop brand recognition, we may be unable to generate significant revenues and our results of operations may be materially adversely affected.

To attract customers we may have to develop a brand identity and increase public awareness of our technology and products. To increase brand awareness, we expect to significantly increase our expenditures for advertising and other marketing initiatives. However, these activities may not result in significant revenue and, even if they do, any revenue may not offset the expenses incurred in building brand recognition. Moreover, despite these efforts, we may not be able to increase public awareness of our brands, which would have a material adverse effect on our results of operations.

If we are unable to respond to rapid technological change and improve our products and services, our business could be materially adversely affected.

The software services industry is characterized by rapid technological advances, changes in customer requirements, frequent new product introductions and enhancements and evolving industry standards in computer hardware and software technology. As a result, we must continually change and improve our products in response to changes in operating systems, application software, computer and communications hardware, networking software, programming tools and computer language technology. The introduction of products embodying new technologies and the emergence of new industry standards may render existing products obsolete or unmarketable. In particular, the market for Internet and intranet applications is relatively new and is rapidly evolving. Our future operating results will depend upon our ability to enhance our current products and to develop and introduce new products on a timely basis that address the increasingly sophisticated needs of our end-users and that keep pace with technological developments, new competitive product offerings and emerging industry standards. If we do not respond adequately to the need to develop and introduce new products or enhancements of existing products in a timely manner in response to changing market conditions or customer requirements, our operating results may be materially diminished.

We may not be able to protect and enforce our intellectual property rights, which could result in the loss of our rights, loss of business or increased costs.

Our success depends to a significant degree upon the protection of our software and other proprietary technology. The unauthorized reproduction or other misappropriation of our proprietary technology would enable third parties to benefit from our technology without paying us for it. Although we have taken steps to protect certain of our proprietary technology, including through the filing of patent applications, such steps may be inadequate and the unauthorized use thereof could have a material adverse effect on our business, results of operations and financial condition. Existing trade secret, copyright and trademark laws offer only limited protection. Moreover, the laws of other countries in which we market our products may afford little or no effective protection of our intellectual property. If we resort to legal proceedings to enforce our intellectual property rights, the proceedings could be burdensome and expensive, even if we were to prevail.

Claims by third parties that we infringe upon their proprietary technology could hurt our financial condition.

If we discover that any of our products, or the technology we license from third parties, violates third party proprietary rights, we may not be able to reengineer our product or obtain a license on commercially reasonable terms to continue offering such products without substantial reengineering. In addition, product development is inherently uncertain in a rapidly evolving technology environment in which there may be numerous patent applications pending for similar technologies, many of which are confidential when filed. Although we sometimes may be indemnified by third parties against claims that licensed third party technology infringes proprietary rights of others, indemnity may be limited, unavailable or, where the third party lacks sufficient assets or insurance, ineffective. We currently do not have liability insurance to protect against the risk that our technology or future licensed third party technology infringes the proprietary rights of others. Any claim of infringement, even if invalid, could cause us to incur substantial costs defending against the claim and could distract our management from our business. Furthermore, a party making such a claim could secure a judgment that requires us to pay substantial damages. A judgment could also include an injunction or other court order that could prevent us from selling our products. Any of these events could have a material adverse effect on our business, operating results and financial condition.

If our electronic security devices were breached, our business would be materially adversely affected.

A key element of our technology and products is our Internet security feature. If anyone is able to circumvent our security measures, they could misappropriate proprietary information or cause interruptions or problems with hardware and software of customers using our products. Any such security breaches could significantly damage our reputation. In addition, we could be liable to our customers for the damages caused by such breaches or we could incur substantial costs as a result of defending claims for those damages. We may need to expend significant capital and other resources to protect against such security breaches or to address problems caused by such breaches. Security measures taken by us may not prevent disruptions or security breaches. In the event that future events or developments result in a compromise or breach of the technology we use to protect a customer’s personal information, our financial condition and business could be materially adversely affected.

We rely on third-party software and content as a component of our products and services.

We integrate third-party software and content as a component of our software. There are inherent limitations in the use and capabilities of much of the technology that we license from third parties. As a result, we face a number of challenges in integrating these elements into our products and services. We would be seriously harmed if the providers from whom we license software and content ceased to deliver and support reliable products, enhance their current products or respond to emerging industry standards. In addition, the third-party software and content may not continue to be available to us on commercially reasonable terms or at all. The loss of, or inability to maintain or obtain this software, could result in delays or reductions. Furthermore, we might be forced to limit the features available in our current or future product offerings. Either alternative could seriously harm our business and operating results.

Risks relating to our Common Stock and other securities

Our Common Stock price may be volatile.

The market prices of securities of Internet and technology companies are extremely volatile and sometimes reach unsustainable levels that bear no relationship to the past or present operating performance of such companies. Factors that may contribute to the volatility of the trading price of our Common Stock include, without limitation:

our quarterly results of operations;

the variance between our actual quarterly results of operations and predictions by stock analysts;

financial predictions and recommendations by stock analysts concerning Internet companies and companies competing in our market in general, and concerning us in particular;

public announcements of technical innovations relating to our business, new products or technology by us or our competitors, or acquisitions or strategic alliances by us or our competitors;

public reports concerning our products or technology or those of our competitors; and

the operating and stock price performance of other companies that investors or stock analysts may deem comparable to us.

In addition to the foregoing factors, the trading prices for equity securities in the stock market in general, and of Internet-related companies in particular, have been subject to wide fluctuations that may be unrelated to the operating performance of the particular company affected by such fluctuations. Consequently, broad market fluctuations may have an adverse effect on the trading price of our Common Stock, regardless of our results of operations.

There is a limited market for our Common Stock. If a substantial and sustained market for our Common Stock does not develop, our stockholders’ ability to sell their shares may be materially and adversely affected.

Our Common Stock is tradable in the over-the-counter market and is quoted on the OTC Bulletin Board under the symbol “VSUT.” Many institutional and other investors refuse to invest in stocks that are traded at levels below the Nasdaq Small Cap Market, which could make our efforts to raise capital more difficult. In addition, the firms that make a market for our Common Stock could discontinue that role. OTC Bulletin Board stocks are often lightly traded or not traded at all on any given day. We cannot predict whether a more active market for our Common Stock will develop in the future. In the absence of an active trading market:

investors may have difficulty buying and selling or obtaining market quotations;

market visibility for our Common Stock may be limited; and

a lack of visibility for our Common Stock may have a depressive effect on the market price for our Common Stock.

Our current executive officers, directors and major stockholders own a significant percentage of our voting stock. As a result, they exercise significant control over our business affairs and policy.

As of the date hereof, our current executive officers, directors and holders of 5% or more of our outstanding Common Stock together beneficially owned approximately 46.9% of our outstanding Common Stock, assuming they exercised all of the currently vested stock options and warrants held by them. These stockholders are able to significantly influence all matters requiring approval by stockholders, including the election of directors and the approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying, deterring or preventing a change in control and may make some transactions more difficult or impossible to complete without the support of these stockholders.

A large number of shares will be eligible for future sale and may depress our stock price.

As of the date hereof, we had outstanding 6,566,702 shares of Common Stock of which approximately a large number are shares are “restricted securities” as that term is defined under Rule 144 promulgated under the Securities Act of 1933. These restricted shares are eligible for sale under Rule 144 at various times. We have entered into registration rights agreements requiring us to register the resale of certain shares of our issued and outstanding Common Stock. No prediction can be made as to the effect, if any, that sales of shares of Common Stock or the availability of such shares for sale will have on the market prices prevailing from time to time. Nevertheless, the possibility that substantial amounts of our Common Stock may be sold in the public market may adversely affect prevailing market prices for the Common Stock and could impair our ability to raise capital through the sale of our equity securities.

We have a significant amount of authorized but unissued preferred stock, which may affect the likelihood of a change of control in our company.

Our board of directors has the authority, without further action by the stockholders, to issue 20,000,000 shares of preferred stock on such terms and with such rights, preferences and designations as it may determine, in its sole discretion. Such terms may include restricting dividends on our Common Stock, dilution of the voting power of our Common Stock, or impairing the liquidation rights of the holders of our Common Stock. The board has already authorized classes of Series A Convertible Preferred Stock, Series B Participating Preferred Stock and Series C Convertible Preferred Stock. Issuance of such preferred stock, depending on the rights, preferences and designations thereof, may have the effect of delaying, deterring or preventing a change in control.

We do not intend to pay dividends in the near future.

Our board of directors determines whether to pay dividends on our issued and outstanding shares. The declaration of dividends will depend upon our future earnings, our capital requirements, our financial condition and other relevant factors. Our board does not intend to declare any dividends on our shares for the foreseeable future.

Our Common Stock may be deemed to be a “penny stock.” As a result, trading of our shares may be subject to special requirements that could impede our stockholders’ ability to resell their shares.

Our Common Stock is a “penny stock,” as that term is defined in Rule 3a51-1 of the Securities and Exchange Act of 1934, because it is selling at a price below five dollars per share. In the future, if we are unable to list our Common Stock on Nasdaq, or a national securities exchange, or the per share sale price is not at least $5.00, our Common Stock may continue to be deemed to be a “penny stock.” Penny stocks are stocks:

with a price of less than five dollars per share;

that are not traded on a recognized national exchange;

whose prices are not quoted on the Nasdaq automated quotation system ; or

of issuers with net tangible assets less than (i) $2,000,000 if the issuer has been in continuous operation for at least three years; or (ii) $5,000,000 if in continuous operation for less than three years; or (iii) of issuers with average revenues of less than $6,000,000 for the last three years.

Section 15(g) of the Exchange Act, and Rule 15g-2 of the Securities and Exchange Act of 1934, require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 of the Securities and Exchange Act of 1934 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer:

to obtain from the investor information concerning his or her financial situation, investment experience and investment objectives;

to determine reasonably, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions;

to provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and

to receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives.

Compliance with these requirements may make it more difficult for holders of our Common Stock to resell their shares to third parties or to otherwise dispose of them.

Our restated certificate of incorporation, and Delaware law, contain provisions that could discourage an acquisition or change of control of our company.

Our restated certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval. Provisions of our certificate of incorporation, such as the provision allowing our board of directors to issue preferred stock with rights more favorable than our Common Stock, could make it more difficult for a third party to acquire control of us, even if that change of control might benefit our stockholders. In addition, certain “anti-takeover” provisions in Delaware law may restrict the ability of our stockholders to authorize a merger, business combination or change of control.

Effect of Existing or Probable Governmental Regulations on Business

The integrated disclosure system for small business issuers adopted by the Securities and Exchange Commission in Release No. 34-30968 and effective as of August 13, 1992, substantially modified the information and financial requirements of a “Small Business Issuer,” defined to be an issuer that (i) has revenues of less than $25 million; (ii) is a U.S. or Canadian issuer, (iii) is not an investment company, and (iv) if a majority-owned subsidiary, the parent is also a small business issuer; provided, however, an entity is not a small business issuer if it has a public float (the aggregate market value of the issuer's outstanding securities held by non-affiliates) of $25 million or more. Our company is deemed to be a “small business issuer.”

The Securities and Exchange Commission, state securities commissions and the North American Securities Administrators Association, Inc. have expressed an interest in adopting policies that will streamline the registration process and make it easier for a small business issuer to have access to the public capital markets.

Sarbanes-Oxley Act

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The Sarbanes-Oxley Act imposes a wide variety of new regulatory requirements on publicly held companies and their insiders. Many of these requirements will affect us. For example:

Our principal executive officer and principal financial officer must now certify the accuracy of all of our periodic reports that contain financial statements;

Our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures; and

We may not make any loan to any director or executive officer and we may not materially modify any existing loans.

The Sarbanes-Oxley Act has required us to review our current procedures and policies to determine whether they comply with the Sarbanes-Oxley Act and the new regulations promulgated thereunder. We will continue to monitor our compliance with all future regulations that are adopted under the Sarbanes-Oxley Act and will take whatever actions are necessary to ensure that we are in compliance.

Item 2. Description of Property.

Our executive and operations offices are located in Canyon Country, California. The Company shares office space with other related parties.

Item 3. Legal Proceedings.

To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against us. In addition, no director, executive officer or affiliate of ours, or owner of record of more than 5% of our Common Stock is a party adverse to us, or has a material interest adverse to us in any proceeding.

Item 4. Submission of Matters to a Vote of Security Holders.

During the year ended December 31, 2009, and subsequent periods through the date hereof, no matters were submitted to a vote of our stockholders, whether through the solicitation of proxies or otherwise.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Market Information

Our Common Stock is quoted on the OTC Bulletin Board of the National Association of Securities Dealers (“NASD”). Our trading symbol is “VSUT.”

Until the first quarter of 2005, there was no “public market” for our shares of Common Stock. For the periods indicated, the following table presents the range of high and low bid prices for the common stock as reported by the OTC Bulletin Board during the quarter being reported.


2008	High		Low
First Quarter	$	0.001	$	0.0007
Second Quarter		.002		.00001
Third Quarter		.0001		.00001
Fourth Quarter		.0008		.0001


2009	High		Low
First Quarter	$	.591	$	0.004
Second Quarter		.015		.015
Third Quarter		.015		.015
Fourth Quarter		.015		.015

Holders

As of the date hereof, the aggregate number of shares of our Common Stock outstanding is 6,566,702, held of record by approximately 247 registered holders.

Dividends

We have not declared any cash dividends with respect to our Common Stock and do not intend to declare dividends in the foreseeable future. Our future dividend policy cannot be ascertained with any certainty.

Under our restated certificate of incorporation, our board of directors, without further action by our stockholders, is authorized to issue up to 20,000,000 shares of preferred stock, in one or more series. The board of directors may designate the preferred shares as to series, preferences, limitations and other provisions as the board of directors may designate from time to time. Of our 20,000,000 authorized shares of preferred stock, (i) 1,000 shares have been designated as Series A Convertible Preferred Stock, of which none are currently issued and outstanding, (ii) 1,000 have been designated as Series B Participating Preferred Stock, of which none are currently issued and outstanding, and (iii) 1,150 have been designated as Series C Convertible Preferred Stock, none of which are currently issued and outstanding.

Securities Authorized for Issuance Under Equity Compensation.

None.

Recent Sales of Unregistered Securities

Item 6. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto set forth in Item 7 of this Annual Report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management's expectations. Factors that could cause differences include, but are not limited to, expected market demand for our products, as well as general conditions of the Internet security marketplace.

Overview

1^st Alerts Agreements have all been Rescinded

We are a development stage enterprise. To date we have incurred significant losses from operations and, at December 31, 2009, had an accumulated deficit of $21,000,000. At December 31, 2008, we had $2,000 of cash and cash equivalents. In 2003, 2004 and 2005, we raised an aggregate of approximately $3,943,000 in financing to fund our operations. Until such time as we generate sufficient revenues from operations, we will continue to be dependent on raising substantial amounts of additional capital through any one of a combination of debt offerings or equity offerings. There is no assurance that we will be able to raise additional capital when necessary.

Results of Operations

The Year Ended December 31, 2008 Compared to the Year Ended December 31, 2009

Revenue: Revenue was $-0- in the year ended December 31, 2009, as compared to -0- in the year ended December 31, 2008.

General and Administrative Expenses: Selling, general and administrative expenses increased from $-0- for the year ended December 31, 2008 to $148,000 for year ended December 31, 2009 due to costs associated with the operations of the public company.

Net loss increased to $148,000 for the year ended December 31, 2009 from net loss of $-0- for the year ended December 31, 2008, due to the above analysis of Income and Expenses.

Our revenues and future profitability are substantially dependent on our ability to:

continue the development of products based on our technology;

identify additional clients to purchase our products;

continue to operate successfully;

modify our software applications, over time, to provide enhanced benefits to then-existing users;

raise substantial amounts of additional capital through any one of a combination of debt offerings or equity offerings, if necessary; and

continue to grow our business through acquisitions.

Liquidity and Capital Resources

General: We are a development stage enterprise. As such, our historical results of operations are unlikely to provide a meaningful understanding of the activities expected to take place over the next twelve months. Our major initiatives through that period are:

furthering the development of our products;

obtaining commercial sales of our products, and continuing our current marketing program; and

seeking acquisitions of additional businesses and assets that will be beneficial to our company and its stockholders.

Since inception, we have primarily funded our operations from private placements of debt and equity. Until such time as we are able to generate adequate revenues from the sale of our software applications, we cannot assure that cash from the issuance of debt securities, the exercise of existing warrants and the placements of additional equity securities will be sufficient to fund our long-term research and development and general and administrative expenses.

Off-Balance Sheet Arrangements

None.

Item 7. Financial Statements.

Financial Statements for the years ended December 31, 2008 and 2009 (see pages F-1 through F-32, hereof)

VSUS TECHNOLOGIES INCORPORATED

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2008 and 2009

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS


	Page
CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets at December 31, 2008 and 2009	F-3

Consolidated Statement of Operations for the Years Ended December 31, 2008 and 2009	F-4

Consolidated Statement of Cash Flows for the Years Ended December 31, 2008 and 2009	F-5

Consolidated Statement of Changes in Stockholders' Deficiency for the Years Ended December 31, 2008 and 2009	F-7

Notes to the Consolidated Financial Statements	F-8

F-1

Larry O'Donnell, CPA, P.C.

Telephone (303)745-4545

2228 South Fraser Street

Fax (303)369-9384

Unit 1

e-mail larryodonnelcpa@msn.com

Aurora, Colorado 80014

www.larryodonnellcpa.com

Report of Independent Registered Public Accounting Firm

To the Board of Directors

VSUS Technologies, Incorporated

Canyon Country, California

I have audited the accompanying consolidated balance sheets of VSUS Technologies, Incorporated and subsidiaries as of December 31, 2008 and 2009, and the related consolidated statements of operations, changes in stockholders’ deficiency, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that I 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. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VSUS Technologies, Incorporated and subsidiaries as of December 31, 2009, and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

These consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has operating and liquidity concerns, has incurred an accumulated deficit of approximately $21,689,000 through the period ended December 31, 2009. This condition raises substantial doubt about the Company's ability to continue as a going concern. Management's plans as to these matters are also described in Note 3. The consolidated 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 these uncertainties.

/s/ Larry O’Donnell, CPA, P.C.

Larry O’Donnell, CPA, P.C.

March 25, 2010

F-2

VSUS TECHNOLOGIES, INCORPORATED

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEET

(IN THOUSANDS)

(except share data)


	December 31,		December 31,
	2008		2009

ASSETS:

CURRENT ASSETS
Cash and cash equivalents	$	2	$	2
Other Receivables		29		29
		31		31

Property and equipment, net		150		150
Other Assets		75		75
	$	256	$	256

LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
CURRENT LIABILITIES
Convertible debentures	$	215	$	-
Related parties		126		-
Promissory notes		1,165		-
		1,506		-

LONG-TERM LIABILITIES
Related Party		328		328
Convertible debenture		1,000		1,000
Total liabilities		1,328		1,328

CONTINGENCIES AND COMMITMENTS

STOCKHOLDERS' EQUITY

Common Stock $0.001 par value (Shares authorized-100,000,000; Shares issued and outstanding- 6,566,702 at December 31, 2009)		240		67
Additional paid-in-capital		20,845		22,450
Deferred stock based compensation		(1,898)		(1,898)
Accumulated deficit		(21,689)		(21,691)
		(2,502)		(1,072)
	$	256	$	256

The accompanying notes to these consolidated financial statements form an integral part thereof.

F-3

VSUS TECHNOLOGIES INCORPORATED

(A DEVELOPMENT STAGE COMPANY)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA)


		FOR THE YEARS ENDED
		DECEMBER 31,
		2008		2009

Revenue	$	-	$	-

Cost of revenues		-		-

Gross profit		-		-

Research and development expense		-		-
Sales and marketing		-		-
General and administrative expense		-		2
Impairment Charges		-		-

Operating loss		-		(2)

Financing expenses, net		-		-
Loss on derivatives		-		-

Net loss	$	-	$	(2)

Basic and diluted loss per share	$	(0.00)	$	(0.00)

Weighted average number of shares outstanding		99,646,272		6,566,702

The accompanying notes to these consolidated financial statements form an integral part thereof.

F-4

VSUS TECHNOLOGIES INCORPORATED

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)


		FOR THE YEARS ENDED
		DECEMBER 31,
		2008		2009


CASH FLOWS-OPERATING ACTIVITIES

Net loss for the period	$	-	$	(2)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		-		-
Impairment charges		-		-
Amortization of deferred stock-based compensation		-		-
Loss on derivatives		-		-
Compensatory elements of stock issuances		-		-
Amortization of debt discount		-		-
Accrued interest-preferred stock		-		-
Transfer of assets to former officer		-		-
Interest to related party		-		-
Accrued liquidated damages		-		-
Increase in accounts payable and accrued expenses		-		-
Net cash (used in) operating activities		-		(2)

CASH FLOWS-INVESTING ACTIVITIES
Cash advance to supplier		-		-
Purchase of fixed assets		-		-
Net cash provided by (used in) operating activities		-		-

CASH FLOWS-FINANCING ACTIVITIES
Short term bank credit		-		-
Proceeds from notes payable		-		-
Exercise of stock options		-		-
Receipt of convertible loan		-		-
Related parties		-		2
Issuance of share capital		-		-
Net cash provided by financing activities		-		2
		-
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		-		-

CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD		-		2

CASH AND CASH EQUIVALENTS-END OF PERIOD	$	-	$	2

The accompanying notes to these consolidated financial statements form an integral part thereof.

F-5

VSUS TECHNOLOGIES INCORPORATED

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)


		FOR THE YEARS ENDED DECEMBER 31,
		2008		2009

Supplementary disclosure of Cash Flows Information:

Interest paid	$	--	$	--

Income taxes paid	$	--	$	--

Non-Cash Investing and Financing Transactions:

Common stock issued for payment of accrued interest	$	--	$	--

Value assigned to beneficial conversion in connection with the 12% convertible debenture	$	--	$	--

Value assigned to warrants issued to purchasers of convertible debentures	$	--	$	--

1stAlerts Merger:

Loan Receivable	$	--	$	--
Security Deposit		--		--
Property and Equipment		--		--
Acquired Technology		--		--
Goodwill		--		--
Accrued Liabilities		--		--
Notes Payable (less debt discount of $377)		--		--
Convertible Notes Payable		--		--
Common Stock and Warrants Issued		--		--
	$	--	$	--

Value assigned to warrants issued to purchasers of convertible debentures	$	--	$	--

In addition, see Note 3 for details related to the acquisition of 1stAlerts.

The accompanying notes to these financial statements form an integral part thereof.

F-6

VSUS TECHNOLOGIES, INCORPORATED

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)


	COMMON STOCK				ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT		TOTAL
	SHARES		AMOUNT		ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT		TOTAL

Balance at December 31, 2007	99,646,272	$	99	$	18,369	$	(21,541)	$	(4,978)

Balance at December 31, 2008	99,646,272		99		18,369		(21,689)		(4,978)
Stock Split	(99,579,570)		(97)		18,369		-		-
Stock Issued for Reverse Merger and Rescission	6,500,000		65		76		-		-
Net Loss for Year ended December 31, 2009	-		-		-		(2)		(2)
Balance at December 31, 2009	6,566,702	$	67	$	18,542	$	(21,691)	$	(4,980)

The accompanying notes to these consolidated financial statements form an integral part thereof.

F-7

VSUS TECHNOLOGIES INCORPORATED

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS AND ACQUISITION

ACQUISITION

The pre-acquisition stockholders of 1stAlerts have been granted the option to purchase up to 95% of the shares of First Info Network, Inc. from the Company under certain circumstances, pursuant to a Call Option Agreement the Company entered into with them.

Since, at the effective time of the 1stAlerts Acquisition, the Company maintained (i) a majority of the outstanding shares of Common Stock of the combined company, (ii) officers who ranked higher than the incoming pre-acquisition 1stAlerts officers, and (iii) the ability to elect and appoint a voting majority of the governing board, the acquisition was treated as a forward merger with the Company as the accounting acquirer.

Following its acquisition of 1stAlerts, the Company shifted its business operations to primarily focus on the 1stAlerts business model. In connection with this change, the Company terminated its business operations in Israel.

BASIS OF PRESENTATION

1^st Alerts Agreements have all been Rescinded

F-8

Management's plans in this regard include raising additional cash from current and potential stockholders and lenders, making strategic acquisitions and increasing the marketing of its products and services. As a result of the Company's acquisition of 1stAlerts, and the anticipated cash flow from the combined company's operations, the Company believes that it will have sufficient capital to fund its operations. However, until such time as the Company generates sufficient revenues from the sale of its products, the Company will continue to be dependent on raising substantial amounts of additional capital through any one of a combination of debt offerings or equity offerings. The Company has no current arrangements with respect to any additional financing. Consequently, there can be no assurance that any future financing will be available to the Company when needed, and on commercially reasonable terms. The Company's inability to derive sufficient revenues from the sale of its products, or obtain additional financing when needed, would have a material adverse effect on the company, requiring the Company to curtail or cease operations. In addition, any equity financing may involve substantial dilution to the Company's then current stockholders.

Being a development stage company, the Company is subject to all the risks inherent in the establishment of a new enterprise and the marketing and manufacturing of a new product, many of which risks are beyond the control of the Company. All of these factors raise substantial doubt as to the ability of the Company to continue as a going concern.

These consolidated financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). All material intercompany balances and transactions have been eliminated

Financial Reporting

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. Revenues and expenses are reported on the accrual basis, which means that income is recognized as it is earned and expenses are recognized as they are incurred.

Use of Estimates

The Company’s significant estimates include allowance for doubtful accounts and accrued expenses. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While the Company believes that such estimates are fair when considered in conjunction with the financial statements taken as a whole, the actual amounts of such estimates, when known, will vary from these estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.

Cash and Cash Equivalents

Cash and cash equivalents include all interest-bearing deposits or investments with maturities of three and nine months or less.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash balances at one financial institution, which is insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC insured institution insures up to $250,000 on account balances. The amounts that are not insured by FDIC limitations are held in short-term securities.

Fair value of financial instruments

The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable and accrued expenses, debenture and loans payable approximate their fair market value based on the short-term maturity of these instruments.

F-9

Accounts Receivable

The Company extends credit to its customers in the normal course of business. Further, the Company regularly reviews outstanding receivables, and provides estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company also performs ongoing credit evaluations of customers’ financial condition. The Company maintains reserves for potential credit losses, and such losses traditionally have been within its expectations.

IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

The Company accounts for the impairment of long-lived assets in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“SFAS No. 144”). SFAS No. 144 requires write-downs to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount.

GOODWILL AND OTHER INTANGIBLE ASSETS

In June 2001, the FASB issued Statement No. 142 Goodwill and Other Intangible Assets. This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements.

Goodwill and intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited, with a weighted average useful life of 15 years.

In performing this assessment, management uses the income approach and the similar transactions method of the market approach to develop the fair value of the acquisition in order to assess its potential impairment of goodwill. The income approach is based on a discounted cash flow model which relies on a number of factors, including operating results, business plans, economic projections and anticipated future cash flows. Rates used to discount future cash flows are dependent upon interest rates and the cost of capital at a point in time. The similar transactions method is a market approach methodology in which the fair value of a business is estimated by analyzing the prices at which companies similar to the subject, which are used as guidelines, have sold in controlling interest transactions (mergers and acquisitions). Target companies are compared to the subject company, and multiples paid in transactions are analyzed and applied to subject company data, resulting in value indications. Comparability can be affected by, among other things, the product or service produced or sold, geographic markets served, competitive position, profitability, growth expectations, size, risk perception, and capital structure. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill impairment. It is possible that assumptions underlying the impairment analysis will change in such a manner that impairment in value may occur in the future.

REVENUE RECOGNITION

Revenue for video streaming and maintenance services is recognized monthly as services are provided pursuant to the terms of contracts or purchase orders, which have prices that are fixed and determinable. The Company assesses the client’s ability to meet the contract terms, including meeting payment obligations, before entering into the contract. Deferred revenue results from customers who are billed for monitoring in advance of the period in which the services are provided, on a monthly, quarterly or annual basis.

The Company follows Staff Accounting Bulletin 104 (SAB 104), which requires the Company to defer certain installation revenue and expenses, primarily equipment related to, and direct labor incurred. The capitalized costs and deferred revenues related to the installation are then amortized over the life of an average customer relationship, on a straight line basis. If the customer is discontinued prior to the expiration of the original expected life, the unamortized portion of the deferred installation revenue and related capitalized costs are recognized in the period the discontinuation becomes effective. In accordance with EITF 00-21, “Revenue Arrangements with Multiple Deliverables”, the service contracts that include both installation and video streaming are considered a single unit of accounting. The criteria in EITF 00-21 that the Company does not meet for services and installation services to be considered separate units of accounting is that the installation service to customers has no stand alone value. The installation service

alone is not functional to customers without the service.

F-10

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Expenditures for major betterments and additions are capitalized while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are currently charged to expense. Any gain or loss on disposition of assets is recognized currently in the statement of income.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows.

INCOME TAXES

The Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that the Company determine whether the benefits of the Company’s tax positions are more likely than not of being sustained upon audit based on the technical merits of the tax position. The provisions of FIN 48 also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, and disclosure. The Company did not have any unrecognized tax benefits and there was no effect on the financial condition or results of operations as a result of implementing FIN 48. The Company does not have any interest and penalties in the statement of operations for the years ended December 31, 2009 and 2008.

EARNINGS (LOSS) PER SHARE

Earnings (loss) per share is computed in accordance with SFAS No. 128, "Earnings per Share". Basic earnings (loss) per share is computed by dividing net income (loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. The outstanding warrants for the years ended December 31, 2009 and 2008 respectively are anti-dilutive and therefore are not included in earnings (loss) per share.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company adopted SFAS No. 123R, "Accounting for Stock-Based Compensation". This statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service.

In addition, a public entity is required to measure the cost of employee services received in exchange for an award of liability instruments based on its current fair value. The fair value of that award has been re-measured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period will be recognized as compensation cost over that period.

For the year ended December 31, 2008 and 2009, the Company did not grant any stock options.

NON-EMPLOYEE STOCK BASED COMPENSATION

The cost of stock based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in Emerging Issues Task Force Issue (“EITF”) 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (“EITF 96-18”).

F-11

COMMON STOCK PURCHASE WARRANTS

The Company accounts for common stock purchase warrants in accordance with the provisions of Emerging Issues Task Force Issue (“EITF”) issue No. 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF 00-19”). Based on the provisions of EITF 00-19, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the company), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

INCOME TAXES

The Company accounts for income taxes using SFAS No. 109, "Accounting for Income Taxes," which requires recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Beginning after December 15, 2006. The Company does not expect that this interpretation will have a material impact on its financial position, results of operations, or cash flows.

In May 2007, the FASB issued FASB Staff Position No. FIN 48-1, Definition of Settlement in FASB Interpretation No. 48 (“the FSP”). The FSP provides guidance about how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. Under the FSP, a tax position could be effectively settled on completion of examination by a taxing authority if the entity does not intend to appeal or litigate the result and it is remote that the taxing authority would examine or re-examine the tax position. The Company does not expect that this interpretation will have a material impact on its financial position, results of operations, or cash flows.

NOTE 3 - GOING-CONCERN AND MANAGEMENT'S PLAN

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, as shown in the accompanying consolidated financial statements, the Company has incurred losses from operations since inception. Management anticipates incurring additional losses in 2008 and 2009. Further, the Company may incur additional losses thereafter, depending on its ability to generate revenues from the licensing or sale of its technologies and products. The Company's technologies and products have never been utilized on a large-scale commercial basis and there is no assurance that any of its technologies or products will receive market acceptance. As reflected in the accompanying consolidated financial statements, the Company's operations for the year ended December 31, 2008 and 2009, resulted in a net loss of $2,000 and the Company has incurred an accumulated deficit of approximately $21,689,000 through the period ended December 31, 2009.

This condition raises substantial doubt about the Company's ability to continue as a going concern. Management's plans as to these matters are also described in Note 3. The consolidated 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 these uncertainties.

F-12

These consolidated financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Codification

In June 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (the “Codification”). This standard replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, and establishes only two levels of U.S. generally accepted accounting principles (“GAAP”), authoritative and nonauthoritative. The FASB ASC has become the source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the SEC, which are sources of authoritative GAAP for SEC registrants. All other nongrandfathered, non-SEC accounting literature not included in the Codification will become nonauthoritative. This standard is effective for financial statements for interim or annual reporting periods ending after September 15, 2009. The adoption of the Codification changed the Company’s references to GAAP accounting standards but did not impact the Company’s results of operations, financial position or liquidity.

Participating Securities Granted in Share-Based Transactions

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 260, Earnings Per Share (formerly FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities). The new guidance clarifies that non-vested share-based payment awards that entitle their holders to receive nonforfeitable dividends or dividend equivalents before vesting should be considered participating securities and included in basic earnings per share. The Company’s adoption of the new accounting standard did not have a material effect on previously issued or current earnings per share.

Business Combinations and Noncontrolling Interests

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 805, Business Combinations (formerly SFAS No. 141(R), Business Combinations). The new standard applies to all transactions or other events in which an entity obtains control of one or more businesses. Additionally, the new standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement date for all assets acquired and liabilities assumed; and requires the acquirer to disclose additional information needed to evaluate and understand the nature and financial effect of the business combination. The Company’s adoption of the new accounting standard did not have a material effect on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 810, Consolidations (formerly SFAS 160, Noncontrolling Interests in Consolidated Financial Statements). The new accounting standard establishes accounting and reporting standards for the noncontrolling interest (or minority interests) in a subsidiary and for the deconsolidation of a subsidiary by requiring all noncontrolling interests in subsidiaries be reported in the same way, as equity in the consolidated financial statements. As such, this guidance has eliminated the diversity in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. The Company’s adoption of this new accounting standard did not have a material effect on the Company’s consolidated financial statements.

Fair Value Measurement and Disclosure

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (formerly FASB FSP No 157-2, Effective Date of FASB Statement No. 157), which delayed the effective date for disclosing all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value on a recurring basis (at least annually). This standard did not have a material impact on the Company’s consolidated financial statements.

In April 2009, the FASB issued new guidance for determining when a transaction is not orderly and for estimating fair value when there has been a significant decrease in the volume and level of activity for an asset or liability. The new guidance, which is now part of ASC 820 (formerly FSP 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly), requires disclosure of the inputs and valuation techniques used, as well as any changes in valuation techniques and inputs used during the period, to measure fair value in interim and annual periods. In addition, the presentation of the fair value hierarchy is required to be presented by major security type as described in ASC 320, Investments — Debt and Equity Securities. The provisions of the new standard were effective for interim periods ending after June 15, 2009. The adoption of the new standard on April 1, 2009 did not have a material effect on the Company’s consolidated financial statements.

F-13

In April 2009, the Company adopted a new accounting standard included in ASC 820, (formerly FSP 107-1 and Accounting Principles Board (“APB”) 28-1, Interim Disclosures about Fair Value of Financial Instruments). The new standard requires disclosures of the fair value of financial instruments for interim reporting periods of publicly traded companies in addition to the annual disclosure required at year-end. The provisions of the new standard were effective for the interim periods ending after June 15, 2009. The Company’s adoption of this new accounting standard did not have a material effect on the Company’s consolidated financial statements.

In August 2009, the FASB issued new guidance relating to the accounting for the fair value measurement of liabilities. The new guidance, which is now part of ASC 820, provides clarification that in certain circumstances in which a quoted price in an active market for the identical liability is not available, a company is required to measure fair value using one or more of the following valuation techniques: the quoted price of the identical liability when traded as an asset, the quoted prices for similar liabilities or similar liabilities when traded as assets, or another valuation technique that is consistent with the principles of fair value measurements. The new guidance clarifies that a company is not required to include an adjustment for restrictions that prevent the transfer of the liability and if an adjustment is applied to the quoted price used in a valuation technique, the result is a Level 2 or 3 fair value measurement. The new guidance is effective for interim and annual periods beginning after August 27, 2009. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements.

Derivative Instruments and Hedging Activities

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 815, Derivatives and Hedging (SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133). The new accounting standard requires enhanced disclosures about an entity’s derivative and hedging activities and is effective for fiscal years and interim periods beginning after November 15, 2008. Since the new accounting standard only required additional disclosure, the adoption did not impact the Company’s consolidated financial statements.

Other-Than-Temporary Impairments

In April 2009, the FASB issued new guidance for the accounting for other-than-temporary impairments. Under the new guidance, which is part of ASC 320, Investments — Debt and Equity Securities (formerly FSP 115-2 and 124-2, Recognition and Presentation of Other-Than-Temporary Impairments), an other-than-temporary impairment is recognized when an entity has the intent to sell a debt security or when it is more likely than not that an entity will be required to sell the debt security before its anticipated recovery in value. The new guidance does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities and is effective for interim and annual reporting periods ending after June 15, 2009. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements.

Subsequent Events

In May 2009, the FASB issued new guidance for subsequent events. The new guidance, which is part of ASC 855, Subsequent Events (formerly SFAS No. 165, Subsequent Events) is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The new guidance is effective for fiscal years and interim periods ended after June 15, 2009 and will be applied prospectively. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements. The Company evaluated subsequent events through the date the accompanying financial statements were issued.

Accounting Standards Not Yet Effective

Accounting for the Transfers of Financial Assets

In June 2009, the FASB issued new guidance relating to the accounting for transfers of financial assets. The new guidance, which was issued as SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140, was adopted into Codification in December 2009 through the issuance of Accounting Standards Updated (“ASU”) 2009-16. The new standard eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. The new guidance is effective for fiscal years beginning after November 15, 2009. The Company will adopt the new guidance in 2010 and is evaluating the impact it will have to the Company’s consolidated financial statements.

F-14

Accounting for Variable Interest Entities

In June 2009, the FASB issued revised guidance on the accounting for variable interest entities. The revised guidance, which was issued as SFAS No. 167, Amending FASB Interpretation No. 46(R), was adopted into Codification in December 2009 through the issuance of ASU 2009-17. The revised guidance amends FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, in determining whether an enterprise has a controlling financial interest in a variable interest entity. This determination identifies the primary beneficiary of a variable interest entity as the enterprise that has both the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance, and the obligation to absorb losses or the right to receive benefits of the entity that could potentially be significant to the variable interest entity. The revised guidance requires ongoing reassessments of whether an enterprise is the primary beneficiary and eliminates the quantitative approach previously required for determining the primary beneficiary. The Company does not expect that the provisions of the new guidance will have a material effect on its consolidated financial statements.

Revenue Recognition

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements. The new standard changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable based on the relative selling price. The selling price for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence if VSOE is not available, or estimated selling price if neither VSOE or third-party evidence is available. ASU 2009-13 is effective for revenue arrangements entered into in fiscal years beginning on or after June 15, 2010. The Company does not expect that the provisions of the new guidance will have a material effect on its consolidated financial statements.

In October 2009, the FASB issued Accounting Standards Update No. 2009-14, "Certain Revenue Arrangements That Include Software Elements" ("ASU No. 2009-14"). ASU No. 2009-14 amends guidance included within ASC Topic 985-605 to exclude tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. Entities that sell joint hardware and software products that meet this scope exception will be required to follow the guidance of ASU No. 2009-13. ASU No. 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. The company is currently evaluating the impact of adopting the provisions of ASU No. 2009-14.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

NOTE 5 - RECLASSIFICATIONS

Certain prior periods' balances have been reclassified to conform to the current period's financial statement presentation. These reclassifications had no impact on previously reported results of operations or stockholders' equity.

In assessing the amount of deferred tax asset to be recognized, management considers whether it is more likely than not that some of the losses will be used in the future. Management expects that they will not have benefit in the future. Accordingly, a fully valuation allowance has been established.

NOTE 6 - COMMON STOCK

LOSS PER COMMON SHARE

Basic loss per common share is computed based upon weighted-average shares outstanding and excludes any potential dilution. Diluted loss per share reflects the potential dilution from the exercise or conversion of all dilutive securities into Common Stock based upon the average market price of common shares outstanding during the period. For the year ended December 31, 2008 and 2009, no effect has been given to outstanding options, warrants, convertible debentures and convertible preferred stock in the diluted computation, as their effect would be anti-dilutive.

F-15

Securities that could potentially dilute basic earnings per share (EPS) in the future, that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following:


Convertible Debt	1,328,571
Total as of December 31, 2009	1,328,571

(1)

Based on conversion rate of 70% of bid price.

Substantial and potential issuances after December 31, 2009:

NOTE 7 - ACQUISITION

On April 14, 2005, the Company consummated the acquisition of all of the issued and outstanding shares of Common Stock of 1stAlerts. At the time of the acquisition, among other things: (i) the Company exchanged 13,000,000 shares of its Common Stock, and 200 shares of its Series B Participating Preferred Stock, for all of the issued and outstanding shares of capital stock of 1stAlerts, (ii) the Company issued 1,861,841 of its Class A Warrants in exchange for warrants to purchase shares of Common Stock of 1stAlerts, (iii) the Company assumed $4,565,000 of promissory and convertible notes from 1stAlerts, and (iv) certain officers and directors of 1stAlerts became officers and directors of the Company. The 200 shares of series B Participating Preferred Stock, the 1.861,841 Class A Warrants which were never registered and a portion of the Convertible Notes were cancelled as a part of the June 24, 2009 Rescission Agreement with 1^st Alerts. The Company returned all of the Capitol stock of 1^st Alerts as part of the 2009 Rescission Agreement. No remaining 1^st Alerts Officers and Directors currently serve as Officers or Directors of the Company.

NOTE 8 - PROPERTY AND EQUIPMENT

Property and equipment at December 30, 2009 consisted of the following (in thousands):


Computer hardware	$	349
		-
	$	-
Less: Accumulated depreciation		199
	$	150

NOTE 9 - CONVERTIBLE LOAN AND SERIES A CONVERTIBLE PREFERRED STOCK

The note and warrants described was rescinded on June 24, 2009.

NOTE 10 - CONVERTIBLE DEBENTURES

FORMER SHAREHOLDERS OF 1^STALERTS

Pursuant to the 1stAlerts Acquisition, First Info Network, Inc. assumed the promissory notes in the aggregate principal amount of $3,400,000 which 1stAlerts had issued to two of the pre-acquisition 1stAlerts stockholders (the “Notes”). The Notes bear interest at the rate of one percentage point per annum above the prime rate and is due September 30, 2009, new due date is September 30, 2011. Pursuant to the Notes, concurrently with any public sale, spin-off or other similar disposition of the shares of First Info Network, Inc., the Notes are convertible into shares of Common Stock of First Info Network, Inc at 70% of the “Market Price” (as determined at the time of such transaction). As security for the repayment of the Notes, the Company pledged all of the Company's shares of First Info Network, Inc. No value has been currently assigned to this contingent beneficial conversion feature.

Interest and principal was amended and forgiven as part of the 2009 1^stAlerts Rescission agreement.

The amended promissory note amount or total is now $1,328,571 due to the 2009 1^stAlerts Rescission agreement.

F-16

NOTE 11- SHAREHOLDERS' EQUITY

STOCK OPTION GRANTS AND EXERCISES

None

PREFERRED STOCK

Preferred stock has been returned to treasury with rescission agreement.

F-17

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

On March 6, 2006, we dismissed Marcum & Kliegman LLP as our independent registered public accounting firm. Marcum & Kliegman LLP had not audited any of our consolidated financial statements, having replaced our previous independent registered public accounting firm, Brightman Almagor & Co. in May 2005. Marcum & Kliegman LLP had reviewed our unaudited subsequent interim reports during the 2005 fiscal year. In connection with Marcum & Kliegman LLP’s review of the subsequent interim periods preceding dismissal on March 6, 2006, we had no disagreements with Marcum & Kliegman on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of Marcum & Kliegman LLP, would have caused it to make reference to the matter in connection with any reports. There were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-B.

On March 6, 2006, we engaged Sherb & Co., LLP as our independent registered public accounting firm. The change was approved by our Board of Directors and was made in order to have access to a firm which had local offices. VSUS had not consulted with Sherb & Co., LLP during our most recent fiscal year, and the subsequent interim period prior to March 6, 2006, regarding the application of accounting principles to any contemplated or completed transactions nor the type of audit opinion that might be rendered on our financial statements. Nor was written or oral advice provided that would be a factor considered by us in reaching a decision as to accounting, auditing or financial reporting issues.

On December 6, 2009, we engaged Larry O’Donnell, PA as our independent registered public accounting firm. The change was approved by our Board of Directors and was made in order to have access to a firm which had local offices. VSUS had not consulted with Larry O’Donnell, PA during our most recent fiscal year, and the subsequent interim period prior to December 6, 2009, regarding the application of accounting principles to any contemplated or completed transactions nor the type of audit opinion that might be rendered on our financial statements. Nor was written or oral advice provided that would be a factor considered by us in reaching a decision as to accounting, auditing or financial reporting issues

We had no other changes of, or disagreements with, our auditors during the fiscal year ended December 31, 2009, or subsequent periods through the date hereof.

Item 8A. Controls and Procedures.

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. Our management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this annual report. Based upon that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

There were no changes to our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 8B. Other Information.

There was no information we were required to disclose in a report on Form 8-K during the fourth quarter of 2009, which was not so reported.

PART III

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

Identification of Directors and Executive Officers as of December 31, 2009

The following table sets forth the names of all of our directors and executive officers, as of December 31, 2009:


Name	Age	Positions Held and Tenure
Kyle Gotshalk	34	Director and President,
Cherish Adams	33	Director and Secretary/Treasurer
Steven Goldberg		Director

Kyle Gotshalk, 34, was elected on January 2, 2009 to serve as an Officer and a Director and on January 3, 2009 to serve as CEO and Vice President of Cannabis Medical Solutions, Inc. Contemporaneous with Cannabis Medical Solutions, Inc., Mr. Gotshalk serves as an Officer and Director of VSUS Technologies, Inc. Beginning February 2005 through January 2009, Mr. Gotshalk was the President of Exit Only, Inc. an internet car sales company. Prior to this Mr. Gotshalk served as President of PSPP Holdings Inc. a credit card processing company, President of Top Flight Consulting LLC, an up and coming consulting firm, and as a Manager and Fitness Director at Sports Center Fitness. Mr. Gotshalk graduated with honors in Public Relations/Communication Studies from University of Montana in 1997. Mr. Gotshalk holds a Real Estate License in California and on May 2006 was awarded the Top Producing Agent award for most sales in first year of Real Estate by his Century 21 office.

Cherish Adams, 33, formerly our CEO, was elected on May 29, 2008 to serve as our President and Director of Commerce Online, Inc. Contemporaneous with Commerce Online Inc., beginning September 2005 through present, Mrs. Adams has served as an Officer and Director of Exit Only, Inc., an internet car sales company. From May of 2001 through February 2005 Mrs. Adams served as the Chief Financial Officer and Controller of Piedmont Properties, a company in the business of securities and real estate investments. Mrs. Adams received her Bachelor of Science Degree in Business Administration with a Concentration in Hotel, Restaurant, Resort Management from the University of Southern Oregon, in Ashland, Oregon in 1997.

Steven Goldberg was the Vice President of 1^st Alerts, Inc. a position he held since 2004.

Significant Employees

Other than as mentioned above, we have no employees who are not executive officers, but who are expected to make significant contributions to our business.

Involvement in Certain Legal Proceedings

Except as stated above, during the past five years, no director, person nominated to become a director, executive officer, promoter or control person of ours:

(1) was a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time;

(2) was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

(4) was found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Audit Committee Financial Expert

The Securities Exchange Commission has adopted rules to implement certain requirements of the Sarbanes-Oxley Act of 2002 pertaining to public company audit committees. One of the rules adopted by the SEC requires a company to disclose whether it has an “audit committee financial expert” serving on its audit committee. Our board of directors has not yet established an audit committee. As such, our board has not yet appointed an audit committee financial expert. At this time, our board of directors believes it would be desirable to have an audit committee, and for the audit committee to have an audit committee financial expert serving on the committee. While informal discussions as to potential candidates have occurred, at this time no formal search process has commenced.

Compliance with Section 16(a) of the Exchange Act

To our knowledge, based solely on a review of such materials as are required by the Securities and Exchange Commission, none of our officers, directors or beneficial holders of more than ten percent of our issued and outstanding shares of Common Stock failed to timely file with the Securities and Exchange Commission any form or report required to be so filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, during the fiscal year ended December 31, 2009.

Code of Ethics

We have not yet adopted a code of ethics policy because we are a development stage company, in the early stages of operations. We intend to adopt a code of ethics policy in the future.

Item 10. Executive Compensation.

Summary Compensation

The following table discloses, for the fiscal years ended December 31, 2008, 2009, certain compensation paid to our named executive officers, being

Name and Principal Position

Year

Salary and

Other Annual

Compensation

($)

Long-Term

Compensation

Securities

Underlying

Options/SARS (#)

Kyle Gotshalk

President and Director

2008

2009

$ 0

Cherish Adams

Sec/Treas and Director

2008

2009

$ 0

Option/SAR Grants

The following table provides information on option/SAR grants during the fiscal year ended December 31, 2009 to our named executive officers.


Name	Number Of Securities Underlying Options/SARS Granted (#)	Percent Of Total Options/ SARs Granted To Employees In Fiscal Year	Exercise Or Base Price ($/SH)	Expiration Date
Kyle Gotshalk	0	N/A	N/A	N/A
Cherish Adams	0	N/A	N/A	N/A

Option/SAR Exercises and Year-End Option/SAR Values

The following table sets forth information with respect to those executive officers listed above, concerning exercise of options during the last fiscal year and unexercised options and SARs held as of the end of the fiscal year:


Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options/SARs at FY-End (#) Exerciseable/Unexercisable	Value of Unexercised In-The-Money Options/SARs at FY-End ($) (1) Exercisable/Unexercisable
Kyle Gotshalk	0	0	0/0	$0.00
Cherish Adams	0	0	0/0	$0.00

Long-Term Incentive Awards

We made no long-term incentive awards to our named executive officers in the fiscal year ended December 31, 2009.

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

Kyle Gotshalk and Cherish Adams both have employment agreements with the company.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

Security Ownership of Certain Beneficial Owners and Management, as of the Date of this Report

The following table sets forth the beneficial ownership of persons who owned more than five (5%) percent of our Common Stock, as well as the share holdings of the current members of management, as of the date hereof:


Name And Address Of Beneficial Owner (1)	Amount And Nature Of Beneficial Ownership	Percent Of Class (2)
Kyle Gotshalk	2,500,000	38%
Cherish Adams	1,500,000	22%
Patrick Oloughlin	1,000,000	15%
Jennifer Manganiello	1,500,000	22%
All Executive Officers and Directors as a Group (1 person)	6,500,000	97%

____________________

* Represents less than 1% of our outstanding Common Stock.

(1)

Unless otherwise indicated, the address of all persons is c/o VSUS Technologies Incorporated, 18565 Soledad Canyon Rd., #153,Canyon Country, CA 91351

(2)

Percentage of beneficial ownership is based upon the 6,566,702 shares of our Common Stock which is outstanding as of the date hereof, plus, where applicable, the number of shares that the indicated person or group had a right to acquire within sixty (60) days of that date.

Changes in Control

To the knowledge of our management, there are no present arrangements or pledges of our securities which may result in a change in control of our company.

Item 12. Certain Relationships and Related Transactions.

None.

Item 13. Exhibits


Exhibit No.		Exhibit Type
31.1		Certification pursuant to Section 13a-14(a) (3)

32.1		Certification pursuant to Section 1350 (3)

Item 14. Principal Accountant Fees and Services.

The following table sets out fees billed by our principal accountant for audit and related services for each of the previous two fiscal years:


Description of Services	Fees billed for 2008 fiscal year		Fees billed for 2009 fiscal year
Audit Fees	$	12,500	$	12,500
Audit-Related Fees	$	0	$	0
Tax Fees	$	0	$	0
All Other Fees	$	0	$	0

We do not currently have an audit committee, however it is our policy to have all audit and audit-related fees pre-approved by the board of directors. All of the above fees were pre-approved by the board of directors.

Audit-related fees were incurred in relation to our quarterly reports on Form 10-QSB and annual reports on Form 10-K.

SIGNATURES

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




	VSUS TECHNOLOGIES INCORPORATED

Date: April 15, 2010	By:	/s/ Kyle Gotshalk
		Kyle Gotshalk
		President and Director

NEW COLOMBIA RESOURCES INC - FORM 10-K - April 15, 2010

Attached files

NEW COLOMBIA RESOURCES INC Reports