SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

(Amendment No. 1)

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

For the fiscal year ended December 31, 2007

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

For the transition period from _________ to _________

Commission file number 333-133936

VISUAL MANAGEMENT SYSTEMS, INC.

(Name of small business issuer in its charter)

Nevada		68-0634458
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

1000 Industrial Way North, Suite C, Toms River, New Jersey		08755
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number

Securities registered under Section 12(b) of the Exchange Act: None

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

Common Stock, par value $.001

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. ¨

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. [Yes x No ¨]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. x

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

Revenues for the fiscal year ended December 31, 2007 were $6,315,622.

The aggregate market value of the shares of the Registrant’s Common Stock held by non-affiliates of the Registrant as of April 14, 2008, was approximately $4,145,980. The Registrant has no other class of capital stock outstanding.

As of April 14, 2008, 7,978,905 shares of the Registrant’s common stock were outstanding.

Transitional Small Business Disclosure Format (check one): [Yes ¨ No x]

Explanatory Note

This Amendment on Form 10-KSB/A amends and restates where indicated our Annual Report on Form 10-KSB for the year ended December 31, 2007 (the “Original Form 10-KSB”) as initially filed with the Securities and Exchange Commission on April 16, 2008. This Amendment is being filed to (i) amend Item 8A to provide a report on management’s assessment over internal controls over financial reporting (ii) expand certain disclosures in the notes to our consolidated financial statements (iii) amend and restate our Consolidated Statement of Stockholders’ Equity (Deficiency) as a result of comments received from the Staff of the Division of Corporation Finance of the Securities and Exchange Commission and (iv) amend and restate our balance sheet to reclassify amounts between additional Paid-in capital and common stock. The amendment and restatement of the Consolidated Statement of Stockholders’ Equity (Deficiency) had no affect on our results of operations, total assets, total liabilities or stockholders’ equity as of and for the period ended December 31, 2007.

Except as otherwise indicated, this Amendment speaks as of December 31, 2007 or as of the date of the filing of the original Form 10-KSB. It must be considered in light of any subsequent statements, including forward looking statements, in any reports filed by us subsequent to the filing of the Original Form 10-KSB.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this Report on Form 10-KSB/A and other filings of the Registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are economic conditions generally and in the industries in which the Registrant may participate; competition within the Registrant’s chosen industries, including competition from much larger competitors; technological advances; available capital; and failure by the Registrant to successfully develop or acquire products and form new business relationships.

In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. Although the Registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Registrant, nor any other person assumes responsibility for the accuracy and completeness of such statements. The Registrant is under no duty to update any of the forward-looking statements contained herein after the date this annual report on Form 10-KSB is submitted to the Securities and Exchange Commission.

Item 7. Financial Statements

The financial statements of the Company called for by this item are set forth herein commencing on page F-1 of this report.

Item 8A. Controls and Procedures

Evaluation of disclosure controls and procedures

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-KSB, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer. Disclosure controls and procedures are controls and other procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

The evaluation made by our Chief Executive Officer and Interim Chief Financial Officer of our disclosure controls and procedures included a review of the controls' objectives and design, our implementation, and the effect of the controls on the information generated for use in this annual report and previous reports to the Commission. In the course of the evaluation, we sought to identify data errors, control problems or acts of fraud and to confirm that appropriate corrective action, including process improvements, were being undertaken. The overall goals of these various evaluation activities are to monitor our disclosure controls and procedures and to make modifications as necessary; our intent in this regard is that the disclosure controls and procedures will be maintained as dynamic systems that change (including with improvements and corrections) as conditions warrant. Based on their evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that, due to inadequate implementation of disclosure controls and procedures, misunderstandings of generally accepted accounting principles and deficiencies in our information technology systems that resulted in an inability to accurately compile information required to be disclosed in our reports, our disclosure controls and procedures were not effective as of December 31, 2007. Since December 31, 2007, we have taken steps to improve our disclosure controls and procedures, including implementing more formal disclosure control procedures, engaging an independent consultant to assist management in the preparation of our financial statements and periodic reports, replacing our Chief Financial Officer and reorganizing our accounting department. These actions are described in more detail below under “Remediation of Material Weaknesses.”

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles (“GAAP”). Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has evaluated the effectiveness of internal control over financial reporting as of December 31, 2007 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Amongst the topics addressed by the evaluation conducted by our Chief Executive Officer and Interim Chief Financial Officer were:

The November 2007 determination by our management and the Audit Committee of our Board of Directors that it was necessary to restate our Consolidated Statements of Operations for the three and six month periods ended August 31, 2007 due to the inclusion of certain inter-company sales in such items.

The April 2008 determination by our management and the Audit Committee of our Board of Directors that it was necessary to again restate our financial statements for the three and six months ended August 31, 2007 and the three and nine months ended September 30, 2007, as well as the pro forma financial statements submitted with our Form 8-K/A filed with the SEC on January 31, 2008.

Based on their evaluation, our Chief Executive Officer and Interim Chief Financial Officer identified a number of material weaknesses in our internal control over financial reporting. These material weaknesses included:

misunderstandings of certain applications of GAAP and poor oversight and management of accounting staff and technology by our former Chief Financial Officer;

deficiencies in our information technology relating to inventory control, revenue recognition, financial forecasting and the management of inter-company transactions;

a lack of uniformity in accounting policies across subsidiaries which allowed and increased the number of undetected discrepancies in inter-company transactions;

the lack of a formal documented closing process for period ends; and

the lack of a formal process for developing recent period results or forward looking financial forecasts.

As a result of the material weaknesses described above, we have concluded that, as of December 31, 2007, our internal control financial reporting was not effective.

Remediation of Material Weaknesses

We have taken the following steps to remediate our material weaknesses:

In April 2008, we engaged an independent consultant to assist management in the preparation of our financial statements and periodic reports. We incurred an expense of approximately $82,000 in connection with this engagement.

In February 2008, we replaced our Chief Financial Officer with an Interim Chief Financial Officer and reorganized our accounting department.

During the quarter ended March 31, 2008, we developed and implemented processes for the entry and maintenance of financial records and taking more frequent physical inventory.

We have utilized the services of Withum, Smith & Brown Global Assurance to evaluate our internal controls over financial reporting and assist us with developing effective internal controls over financial reporting. The total cost for these services is expected to be approximately $80,000.

We have utilized the services of Withum, Smith & Brown, P.C. to assist us in the preparation of our financial statements. Total expense incurred for these services were approximately $180,000 and $25,000 during the year ended December 31, 2007 and the quarter ended March 31, 2008, respectively.

We have continued to train and educate staff as to applicable accounting policies.

We have identified the accounting software package which we plan to obtain and implement to improve our financial reporting system.

During the quarter ended March 31, 2008, we began implementing a formal closing process for period ends and developing recent period results and forward looking forecasts.

As a result of the steps described above, we believe that we have remediated the material weaknesses in our internal control over financial reporting identified above other than the deficiencies in our information technology and inventory control. To remediate this material weakness, we plan to obtain and implement the accounting software package discussed above during the quarter ending March 31, 2009, to the extent that financial resources are available at that time. The estimated cost of obtaining and implementing this software is approximately $200,000.

Changes in Internal Control over Financial Reporting

During the quarter ended December 31, 2007, the changes made in our internal control over financial reporting that have materially affected, or are reasonably like to affect, our internal control over financial reporting are:

• We obtained approval from our Board of Directors to substantially upgrade our accounting software; and

• We engaged Withum, Smith & Brown Global Assurance to evaluate our internal controls over financial reporting and assist us with developing effective internal controls over financial reporting.

Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. In addition, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Our independent auditor, Sobel & Company, LLC, was not required to and did not perform an audit of the effectiveness of our internal controls over financial reporting.

PART III

Item 13. Exhibits

Reference is made to the Index of Exhibits beginning on page E-1 hereof.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VISUAL MANAGEMENT SYSTEMS, INC.

Date: August 27, 2008	By:	/s/ Jason Gonzalez
	Name:	Jason Gonzalez
	Title:	Chairman and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Date: August 27, 2008		/s/ Jason Gonzalez
	Name:	Jason Gonzalez
	Title:	President, Chief Executive Officer and Director

Date: August 27, 2008		/s/ James D. Gardner
	Name:	James D. Gardner
	Title:	Chief Financial Officer (Principal Accounting Officer)

Date: August 27, 2008		*
	Name:	Michael Ryan
	Title:	Director

Date: August 27, 2008		*
	Name:	Jack Jacobs
	Title:	Director

Date: August 27, 2008		*
	Name:	Martin McFeely
	Title:	Director

Date: August 27, 2008		*
	Name:	Robert Moe
	Title:	Director

By:	/s/ Jason Gonzalez
	Jason Gonzalez, Attorney-in-Fact

Visual Management Systems, Inc.

Consolidated Financial Statements

Contents

Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets as of December 31, 2007 and 2006	F-3
Statements of Operations for the Fiscal Years Ended December 31, 2007 and 2006	F-4
Statements of Stockholders’ Equity for the Fiscal Years Ended December 31, 2007 and 2006	F-5
Statements of Cash Flows for the Fiscal Years Ended December 31, 2007 and 2006	F-6
Notes to the Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders

Visual Management Systems Inc. and Subsidiaries

Toms River, New Jersey

We have audited the accompanying balance sheets of Visual Management Systems Inc. and Subsidiaries (the “Company”), as of December 31, 2007 and 2006, and the related statements of operations and changes in stockholders' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Visual Management Systems Inc. and Subsidiaries at December 31, 2007 and 2006 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations; the Company has experienced a deficiency of cash from operations and lacks sufficient liquidity to continue its operations. These matters raise substantial doubt as to the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Sobel & Co., LLC

Certified Public Accountants

April 15, 2008 (except for Note 16, as to which the date is August 27, 2008).

Livingston, New Jersey

F-2

Visual Managements Systems, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2007 and 2006

	2007			2006

Assets

Current assets
Cash	$	707,025		$	963
Accounts receivable		296,447			383,718
Inventory		605,724			246,039
Prepaid expenses		23,931			14,257
Total current assets		1,633,127			644,977

Property and equipment - net		682,285			323,861
Deposits and other assets		102,308			58,324
Deferred Financing Costs - net		1,851,091			3,866

Total Assets	$	4,268,811		$	1,031,028

Liabilities and Stockholders' Deficit

Current liabilities
Accounts payable		780,521			787,537
Accrued expenses and other current liabilities		764,605			226,510
Deferred revenue		-			22,086
Sales tax payable		38,727			22,531
Bank line of credit		49,981			46,697
Current maturity of convertible notes payable		208,333
Current portion of long-term debt		347,539			76,094
Current portion of obligations under capital leases		30,700			18,143
Total current liabilities		2,220,406			1,199,598

Convertible notes payable		2,818,334			-
(net of current maturities and unamortized discount of $723,333)
Long-term debt - net of current portion		346,509			298,267
Obligations under capital leases - net of current portion		37,179			12,213
Loans payable stockholders		-			10,943

Stockholders' deficit
Preferred stock		1			-
Common stock, $.001 par value; 50,000,000 shares authorized		7,379			6,777
Additional paid-in-capital		12,030,155			2,124,155
Accumulated deficit		(13,041,152	)		(2,620,925	)
Treasury stock		(150,000	)		-
Total stockholders' deficit		(1,153,617	)		(489,993	)

Total liabilities and stockholder's deficit	$	4,268,811		$	1,031,028

See report of independent registered public accounting firm and notes to consolidated financial statements

Visual Managements System, Inc. and Subsidiaries

Consolidated Statements of Operations

Year Ended December 31, 2007 and 2006

	2007			2006

Revenues - net	$	6,315,622		$	4,495,778

Cost of revenues		3,392,995			2,409,465

Gross margin		2,922,627			2,086,313

Operating expenses (including stock-based compensation of $980,938 and $469,337 for 2007 and 2006 respectively)		8,486,494			3,689,171
Loss from operations		(5,563,867	)		(1,602,858	)

Other (income) expenses
Debt conversion expense		796,084			264,990
Interest income		-			(201	)
Interest expense		3,420,634			60,075
Miscellaneous income		-			(1,108	)
		4,216,718			323,756

Net loss before provision for income taxes		(9,780,585	)		(1,926,614	)

Provision for income taxes		4,060			-

Net loss	$	(9,784,645	)	$	(1,926,614	)

Deemed dividend on convertible preferred stock		635,582			-

Net Loss available to common stock		(10,420,227	)		(1,926,614	)

Weighted average shares outstanding		6,646,751			4,938,171

Per share data (basic and diluted)		(1.57	)		(0.39	)

See report of independent registered public accounting firm and notes to consolidated financial statements

Visual Managements System, Inc. and Subsidiaries

Consolidated Statement of Stockholder’s Equity (Deficiency)

	Preferred Stock				Common Stock						Paid-In			Treasury			Accumulated			Stockholders'
	Shares		Amount		Shares			Amount			Capital			Stock			Deficit			Equity (Deficit)
January 1, 2006						14,250,000		$	14,250		$	600,555		$	-		$	(694,311	)	$	(79,506	)

Reverse stock split						(12,214,267	)		(12,214	)		12,214
Shares retired in connection with merger						(476,429	)		(476	)		476						-			-
		-		-		1,559,305			1,559			613,246						(694,311	)		(79,506	)

Shares issued in connection with the merger						5,218,000			5,218			(5,218	)					-			-
		-		-		6,777,305			6,777			608,028						(694,311	)		(79,506	)

Net Loss																		(1,926,614	)		(1,926,614	)
Stock option expense												469,337									469,337
Stock warrant issuances												406,800									406,800
Conversion of convertible debt to stock												639,990									639,990

December 31, 2006		-		-		6,777,305			6,777			2,124,155			-			(2,620,925	)		(489,993	)

Net loss																		(10,420,227	)		(10,420,227	)
Stock option expense												980,938									980,938

Repurchase of stock into treasury															(150,000	)					(150,000	)
Sale of common stock												871,230									871,230
Redemption of stock warrants												590,044									590,044
Issuance of common stock for interest												4,000									4,000
Issuance of common stock to placement agent												25,000									25,000
-
Beneficial Conversion Feauture on Convertible Debt												125,000									125,000
Issuance of Warrants to Placement Agent of Convertible Debt												22,678									22,678

Issuance of common stock for consulting services						100,000			100			(100	)								-
Issuance of preferred stock		616		1								635,582									635,583
Issuance costs on preferred stock												(252,448	)								(252,448	)
Issuance of warrants on preferred stock												903,065									903,065
Issuance of common stock to placement agent						71,600			72			(72	)								-
Deemed dividend on preferred stock												635,582									635,582

Issuance of common stock for services						100,000			100			389,900									390,000
Issuance of common stock for services						30,000			30			61,470									61,500
Issuance of warrants to placement agent of convertible debt												1,588,391									1,588,391
Beneficial conversion feature on convertible debt												3,000,000									3,000,000
Conversion of debt to stock						300,000			300			325,740									326,040
December 31, 2007		616	$	1		7,378,904			7,379			12,030,155			(150,000	)		(13,041,152	)		(1,153,617	)

See report of independent registered public accounting firm and notes to consolidated financial statements

Visual Managements System, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Year Ended December 31, 2007 and 2006

	2007			2006

Cash flows from operating activities
Net loss	$	(9,784,645	)	$	(1,926,614	)
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and amortization		147,961			78,177
Non-cash interest on convertible debt		3,237,170			-
Bad debt expense		47,917			-
Stock-based compensation		980,938			876,137
Services paid in common stock		451,500			-
Amortization of convertible debt discount		110,667			-
Debt conversion expense		796,084			264,990
Bank overdraft		-			46,697
(Increase) decrease in operating assets		-			-
Accounts receivable		39,354			(145,101	)
Inventory		(439,576	)		(125,946	)
Prepaid expenses and other assets		(9,674	)		(8,801	)
Other assets		(43,984	)		(27,640	)
Increase (decrease) in operating liabilities		-			-
Accounts payable		(7,016	)		550,447
Change in deferred revenue		(22,086	)		4,441
Accrued expenses and other current liabilities		538,095			201,420
Sales tax payable		16,196			(23,101	)
Net cash used by operating activities		(3,941,099	)		(234,894	)

Cash flows from investing activities
Purchases of property and equipment		(99,471	)		(22,374	)
Payment of security deposit		-			(23,384	)
Net cash used by investing activities		(99,471	)		(45,758	)

Cash flows from financing activities
Repayment of capital leases		(23,930	)		(9,040	)
Proceeds from convertible notes payable - net of
discount of $750,000		2,676,674			325,000
Interest paid in stock		4,000			-
Net change in line of credit		3,284			50,000
Proceeds from long-term debt and notes		666,000			-
Repurchase of stock into treasury		(150,000	)		-
Principal payments on auto loans		(92,578	)		-
Repayment of debt		(483,305	)		(49,129