UNITED ~~STATESSECURITIES~~STATES SECURITIES AND EXCHANGE ~~COMMISSIONWashington~~COMMISSION Washington, D.C. ~~20549~~ 20549

FORM 10-Q

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2011

For the quarterly period ended March 31, 2011

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-32289

HS3 TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter)

Nevada	20-3598613
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)

1800 Boulder Street, Suite 600, Denver CO	80211-6400
(Address of principal executive offices)	(Zip Code)

(303) 455-2550 (Telephone number, ~~including~~ including area code)

N/A (Former name, former address and ~~former~~ former fiscal year, if changed since last report) \

Indicate by check mark 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 [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting ~~company)~~ Smaller reporting company [ X ] company)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [ ] YES [ ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] YES [ ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of ~~May~~November 1311, 2011, there were 6982,~~816~~623,~~636~~836 shares of the registrant’s Common Stock issued and outstanding

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

PART 1 – FINANCIAL INFORMATION		4

	Item 1. Financial Statements	4

	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

	Item 3. Quantitative and Qualitative Disclosures About Market Risks	26

	Item 4. Controls and Procedures	23

PART II - OTHER INFORMATION		24

	Item 1. Legal Proceedings	24

	Item 1A. Risk Factors	24

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29

	Item 3. Defaults Upon Senior Securities	29

	Item 4. [Removed and Reserved]	29

	Item 5. Other Information	29

	Item 6. Exhibits	30

SIGNATURES		31

		Page
		No.
Item 1.	Unaudited Condensed Consolidated Financial Statements	4
	Condensed consolidated balance sheets as of March 31, 2011 and June 30, 2010	5
	Condensed consolidated statements of operations for the three months and nine months ended March 31, 2011 and 2010	6
	Condensed consolidated statements of stockholders equity (deficit) for the years ended June 30, 2009 and 2010 and nine months ended March 31, 2011	7
	Condensed consolidated statements of cash flows for the nine months ended March 31, 2011 and 2010	8
	Notes to condensed consolidated financial statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4 .	Controls and Procedures	23

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults upon Senior Securities	30
Item 4.	[Removed and Reserved]	30
Item 5.	Other Information	30
Item 6.	Exhibits	30

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This ~~Quarterly~~quarterly ~~Report~~report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, ~~but~~that ~~not~~may ~~limited~~cause our or our industry’s actual results, levels of activity, performance or achievements to ~~the~~be ~~following:~~materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

.Although ~~certain~~we ~~statements,~~believe ~~including~~that ~~possible~~the orexpectations ~~assumed~~reflected ~~future results of operations,~~ in ~~“Management’s~~the forward-looking ~~Discussion~~statements ~~and~~are ~~Analysis~~reasonable, ofwe ~~Financial~~cannot ~~Condition~~guarantee ~~and~~future ~~Results~~results, levels of ~~Operations;”~~activity, .performance ~~any statements contained herein regarding the prospects for our business~~ or ~~any of our services;~~ achievements. ~~any~~Except ~~statements~~as ~~preceded~~required by applicable law, ~~followed~~including bythe orsecurities ~~that~~laws ~~include~~of the ~~words~~United ~~“may~~States,” ~~“should”,~~we ~~“believes,”~~do ~~“expects,”~~not intend ~~“anticipates,”~~to ~~“intends,”~~update ~~“continues,”~~any ~~estimates,”~~of ~~“plans,”~~the ~~“targets”~~forward-looking ~~“predicts,”~~statements ~~“attempts,”~~to ~~“is~~conform ~~scheduled,” or similar expressions; and . other~~ these statements ~~obtained~~to ~~herein~~actual ~~regarding matters that are not historical facts~~results.

Our ~~business~~financial and results of operation are subject to risk and uncertainties, many of which are beyond our ability to control or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by forward-looking statements, ~~and investors~~ are ~~cautioned~~stated ~~not~~in toUnited ~~place~~States ~~undue reliance on such~~Dollars ~~statements,~~(US$) ~~which speak only as of the date thereof. Important factors that could cause actual results to differ materially from our expectations~~ and ~~may adversely affect our business and results of operations, include, but~~ are ~~not limited~~prepared ~~to those risk factors set forth~~ in ~~this~~accordance ~~report~~with inUnited ~~Part~~States IIGenerally ~~Other~~Accepted ~~Information~~Accounting ~~under the heading “Item 1A~~Principles. ~~Risk Factors.”~~

InAs used in this ~~Quarterly~~quarterly ~~Report~~report, ~~unless otherwise~~the ~~specified~~terms “we”, ~~all~~“us”, ~~dollar~~“our”, “our ~~amounts~~company” ~~are~~and ~~expressed~~“HS3,” inmeans ~~United~~HS3 ~~Sates~~Technologies, ~~dollars~~ Inc. and ~~all~~our ~~references~~wholly-owned subsidiary, toip-Colo, ~~“common~~Inc., ~~shares”~~unless ~~refer to~~ the ~~common~~context ~~shares~~clearly inrequires ~~our capital stock~~otherwise.

As used in this Quarterly Report, the terms “we”, “us”, “our”, “our company” and “HS3,” means HS3 Technologies, Inc. and our wholly-owned subsidiary, ip-Colo, Inc., unless the context clearly requires otherwise.

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements.

The interim unaudited condensed consolidated financial statements of HS3 Technologies, Inc. as of and for the three month ~~and nine month~~ period ended ~~March~~September 3130, 2011, are included herein beginning on the following page. The accompanying interim unaudited condensed ~~consolidated~~ consolidated financial statements should be read in conjunction with our audited ~~consolidated~~ consolidated financial statements and related notes for the year ended June 30, ~~2010,~~ 2011, together with our discussion and analysis of financial condition and results of operations, included in our Annual Report on Form 10-K filed on ~~September~~ 29October 6, ~~2010~~ 2011 with the Securities and Exchange Commission (File No. 001-32289). Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

The unaudited condensed consolidated financial statements include the accounts of HS3 Technologies, Inc. and our wholly-owned subsidiary, ip-Colo, Inc. All inter-company balances and transactions have been eliminated.

We have no off-balance-sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

HS3 Technologies, Inc. Condensed consolidated ~~balance~~ balance sheets Unaudited

		March 31,			June 30,
		September 30,			June 30,
		2011			2010
		Unaudited			2011
		Unaudited			Audited
ASSETS
Current Assets:
Cash and cash equivalents	$	98,~~207~~354		$	3413,~~915~~341
Trade accounts receivable		388,648			8,449
Trade accounts receivables		380,138			351,248
Other receivable		-			7,913
Other receivables		-			-
Inventory		8666,~~946~~038			8662,~~045~~424
		484,801			137,322
		454,530			427,013
Furniture, fixtures and equipment, net of accumulated depreciation of $158,837 and $114,538 respectively		25,145			34,522
Fixed assets, net of accumulated depreciation of $144,170 and $139,150 respectively		24,065			25,615
Other assets, net		-			~~5,833~~-
	$	~~509~~478,~~946~~595		$	~~177~~452,~~677~~628
LIABILITIES AND EQUITY
Current Liabilities:
Trade accounts payable	$	~~199~~113,~~984~~265		$	~~114~~103,~~393~~058
Other accrued liabilities		~~580~~54,~~148~~299			~~495~~25,~~110~~121
Subordinated notes payable		~~655~~650,~~500~~000			~~580~~711,~~500~~270
Note payable, current portion		~~245~~150,000			-150,000
Long-term debt, current portion		3312,000			~~109~~21,~~024~~000
Other liabilities		-			~~28,000~~-
Total Liabilities		1979,~~713,632~~564			1,~~327~~010,~~027~~449
Stockholders’ Equity (Deficit):
Preferred stock, $0.0001 par value, 2,500,000 shares authorized, none issued or outstanding		-			-
Common stock owed, not issued, 0 shares at March 31, 2011 and 600,000 shares at June 30, 2010		-			600
Common Stock, $0.001 par value, 200,000,000 authorized, issued and outstanding 82,623,836 at September 30, 2011 and June 30, 2011, respectively		82,624			82,624
Common Stock, $0.001 par value, 200,000,000 authorized, issued and outstanding 69,816,636 at March 31, 2011 and 68,116,636 at June 30, 2010		69,817			68,117
Additional paid-in capital		6,117,246			6,117,246
Additional paid-in capital		5,580,246			5,569,526
Accumulated deficit		(6,700,839	)		(6,757,691	)
Accumulated deficit		(6,853,749	)		(6,787,593	)
		(500,969	)		(557,821	)
		(1,203,686	)		(1,149,350	)
	$	478,595		$	452,628
	$	509,946		$	177,677

~~See~~5 ~~accompanying notes to condensed consolidated financial statements~~

5HS3 Technologies, Inc. Condensed consolidated statement of operations Unaudited

HS3 Technologies, Inc. Condensed consolidated statement of operations Unaudited

		Three months ended September 30,
		2011			2010


Revenue	$	602,213		$	28,129
Cost of goods sold		332,288			2,469
Gross profit		269,925			25,660

Operating Expenses:
Selling, general and administrative		181,538			62,754
Depreciation and amortization		5,019			9,884
Total operating expenses		186,557			72,638

Income(loss) from operations		83,368			(46,978	)

Other income (expense):
Interest expense, net		(26,516	)		(5,186	)
Total other income (expense)		(26,516	)		(5,186	)

Net Income(loss)	$	56,852		$	(52,164	)

Net income(loss) per share-basic and diluted	$	0.0007		$	(0.0008	)

Weighted average number of common shares outstanding		82,623,836			68,116,636

		Three months ended March 31,						Nine months ended March 31,
		2011			2010			2011			2010
Revenue	$	567,786		$	36,990		$	622,731		$	100,776
Cost of goods sold		333,046			3,355			342,726			17,333
Gross profit		234,740			33,545			280,005			83,443
Operating Expenses:
Selling, general and administrative		124,569			136,681			287,156			497,772
Depreciation and amortization		6,338			11,966			24,988			34, 694
Total operating expenses		130,907			148,647			312,144			532,466
Income(loss) from operations		103,833			(115,102	)		(32,139	)		(449,023	)
Other income (expense):
Interest expense, net		(24,538	)		(24,058	)		(34,017	)		(113,243	)
Total other income (expense)		(24,538	)		(24,058	)		(34,017	)		(113,243	)
Net Income(loss)	$	79,295		$	(139,160	)	$	(66,156	)	$	(562,266	)
Net income(loss) per share-basic and diluted	$	0.001		$	(0.002	)	$	(0.001	)	$	(0.010	)
Weighted average number of common shares outstanding		69,488,858			68,329,969			68,957,147			54,835,914

~~See~~HS3 ~~accompanying~~Technologies, ~~notes~~Inc. toCondensed ~~condensed~~ consolidated ~~financial statements~~statement of stockholders’ equity (deficit)

					Common								Total
	Common Stock				Stock Owed			Additional		Retained			Stockholders
	Shares		Amount		Not Issued			Paid in		Earnings			Equity

Balances as of June 30, 2009	41,995,802	$	41,996	$	-		$	4,385,001	$	(6,107,805	)	$	(1,680,808	)
Shares issued for cash	4,500,000		4,500					220,500		-			225,000
Shares issued for conversion of debt	15,500,000		15,500					759,500					775,000
Shares issued for cancellation of debt	5,870,834		5,871					176,125					181,996
Shares issued for services	250,000		250					5,000					5,250
Shares owed for services, not issued					600			23,400					24,000
Net loss	-		-					-		(679,788	)		(679,788	)
Balances as of June 30, 2010	68,116,636	$	68,117	$	600		$	5,569,526	$	(6,787,593	)	$	(1,149,350	)

Shares issued for conversion of debt	12,207,200		12,207		-			530,400		-			542,607

Shares issued for services	2,300,000		2,300		(600	)		17,320		-			19,020
Net income	-		-		-			-		29,902			29,902
Balances as of June 30, 2011	82,623,836	$	82,624	$	-		$	6,117,246	$	(6,757,691	)	$	(557,821	)

Shares issued for services	-		-		-			-		-			-

Net income	-		-		-			-		56,852			56,852
Balances as of Sept 30, 2011	82,623,836	$	82,624	$	-		$	6,117,246	$	(6,700,839	)	$	(500,969	)

~~HS3~~7 ~~Technologies, Inc. Condensed consolidated statement of stockholders’ equity (deficit)~~

					Common								Total
					Stock Owed			Additional		Retained			Stockholders
	Common Stock				Not Issued			Paid-in		Earnings			Equity
	Shares		Amount					Capital		(Deficit)			(Deficit)
Balances as of June 30, 2008	39,945,802	$	39,946	$	-		$	4,333,459	$	(4,931,386	)	$	(557,981	)
Shares issued for cash	-		-					-		-			-
Shares issued for services/ cancellation of debt	2,050,000		2,050					51,542		-			53,592
Net loss	-		-					-		(1,176,419	)		(1,176,419	)
Balances as of June 30, 2009	41,995,802	$	41,996	$	-		$	4,385,001	$	(6,107,805	)	$	(1,680,808	)
Shares issued for cash	4,500,000		4,500					220,500		-			225,000
Shares issued for conversion of debt	15,500,000		15,500					759,500					775,000
Shares issued for cancellation of debt	5,870,834		5,871					176,125					181,996
Shares issued for services	250,000		250					5,000					5,250
Shares owed for services, not issued					600			23,400					24,000
Net loss	-		-					-		(679,788	)		(679,788	)
Balances as of June 30, 2010	68,116,636	$	68,117	$	600		$	5,569,526	$	(6,787,593	)	$	(1,149,350	)
Shares issued for services	1,700,000		1,700		(600	)		10,720		-			11,820
Net loss	-		-		-			-		(66,156	)		(66,156	)
Balances as of March 31, 2011	69,816,636	$	69,817	$	-		$	5,580,246	$	(6,853,749	)	$	(1,203,686	)

HS3 Technologies, Inc.
Condensed consolidated statement of cash flows
Unaudited

See accompanying notes to condensed consolidated financial statements

		Three months ended September 30,
		2011			2010


Cash flows from operating activities:
Net income(loss)	$	56,852		$	(52,164	)

Adjustments to reconcile net loss to net cash provided by (used in) operations:
Depreciation and amortization		5,019			9,884
Accretion of interest		-			1,345
Warrants, stock, and options issued for service		-			-
Changes in operating assets and liabilities:
Accounts and other receivables		(28,890	)		(18,992	)
Inventory		(3,614	)		5,383
Accounts payable and accrued liabilities		39,385			65,631
Net cash (used in) operating activities		68,752			11,087

Cash flow from investing activities:
Additions fixed assets		(3,469	)		(6,064	)
Net cash (used in) investing activities		(3,469	)		(6,064	)

Cash flow from financing activities:
Sale of common stock		-			-
Proceeds (repayments) convertible notes payable		-			-
Proceeds (repayments) subordinated notes payable		(61,270	)		-
Borrowing/repayments revolving credit agreement		-			-
Borrowings (repayments) long-term debt		(9,000	)		(38,051	)

Net cash flow provided by (used in)financing activities		(70,270	)		(38,051	)

Increase (decrease) in cash and cash equivalents		(4,987	)		(33,028	)
Cash and cash equivalents, beginning of period		13,341			34,915
Cash and cash equivalents, end of period	$	8,354		$	1,887


Supplemental cash flow information:
Interest paid	$	25,266			3,841
Income taxes paid	$	-		$	-


Non cash financing activities:
Stock issued for services	$	-		$	-
Stock issued for other accrued liabilities	$	-		$	-

7See accompanying notes to condensed consolidated financial statements

~~HS3~~8 ~~Technologies, Inc.Condensed consolidated statement of cash flows Unaudited~~

		Nine months ended March 31,
		2011			2010
Cash flows from operating activities:
Net income(loss)	$	(66,156	)	$	(562,266	)
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Depreciation and amortization		24,988			34,694
Accretion of interest		2,689			4,034
Warrants, stock, and options issued for service		11,820			29,250
Changes in operating assets and liabilities:
Accounts and other receivables		(372,286	)		(24,411	)
Inventory		(901	)		7,926
Accounts payable and accrued liabilities		170,629			23,014
Net cash (used in) operating activities		(229,217	)		(487,759	)
Cash flow from investing activities:
Additions to furniture, fixtures & equipment		(9,777	)		(15,915	)
Net cash (used in) investing activities		(9,777	)		(15,915
Cash flow from financing activities:
Sale of common stock		-			225,000
Proceeds (repayments) convertible notes payable		-			(25,000	)
Proceeds (repayments) subordinated notes payable		75,000			187,500
Borrowing/repayments revolving credit agreement		245,000			-
Borrowings (repayments) long-term debt		(106,714	)		(101,751	)
Other accrued liabilities converted to equity		-			181,996
Net cash flow provided by (used in)financing activities		213,286			467,745
Increase (decrease) in cash and cash equivalents		(25,708	)		(35,929	)
Cash and cash equivalents, beginning of period		34,915			38,592
Cash and cash equivalents, end of period	$	9,207		$	2,663
Supplemental cash flow information:
Interest paid	$	10,682			23,925
Income taxes paid	$			$	-
Non cash financing activities:
Stock issued for services	$	11,820		$	29,250
Stock issued for other accrued liabilities	$	-		$	181,996
Stock issued for convertible notes payable	$	-		$	775,000
Subordinated notes payable issued for convertible notes payable	$	-		$	373,000

HS3 Technologies, Inc.

~~See~~Notes ~~accompanying notes~~ to condensed consolidated financial statements

81. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

~~HS3~~(a) ~~Technologies,~~Nature ~~Inc.~~of Business

~~Notes~~ HS3 Technologies, Inc. (“HS3” or the “Company”) was incorporated in Nevada on January 28, 2003. Prior to ~~condensed~~a ~~consolidated~~name change ~~financial~~in ~~statements~~October 2005, the Company was known as Zeno, Inc. The Company also changed its fiscal year end from March 31 to June 30. In November 2005, the Company acquired ip-Colo, Inc., in a reorganization, a development stage corporation (herein referred to as “ip-Colo”). On the date of the reorganization, the Company, a non-operating entity without any assets or liabilities, was to provide advanced wireless technologies integrated with high-speed internet, via satellite, and to provide real-time security and monitoring for many industries.

1 We offer a diverse line of cutting edge products, services and customized integrated security solutions to meet the growing needs of the security industry. ~~SUMMARY~~To OFmeet ~~SIGNIFICANT~~the ~~ACCOUNTING~~ever ~~POLICES~~changing needs of the industry, we have launched a combination of state-of-the art products and services that include digital video recording technology (DVR), personal biometric identification units, CCTV, video monitoring, cellular and wireless mesh networks and wireless internet-linked satellite surveillance systems. This combination of products encompasses a total line that we believe will meet many commercial, agricultural, governmental, and residential customer security needs.

(ab) ~~Nature~~Basis of ~~Business~~presentation and use of estimates

~~HS3~~The ~~Technologies,~~accompanying ~~Inc. (“HS3” or~~unaudited ~~the~~condensed ~~“Company”)~~consolidated ~~was~~financial ~~incorporated~~statements in ~~Nevada~~this Quarterly Report on ~~January~~Form 10-Q ~~28,~~have ~~2003.~~been ~~Prior~~prepared pursuant to athe ~~name~~rules and regulations of the Securities ~~change~~and inExchange ~~October~~Commission. ~~2005~~Accordingly, ~~the~~these ~~Company~~statements ~~was~~reflect ~~known~~adjustments (consisting asonly ~~Zeno~~of normal recurring entries), ~~Inc.~~which ~~The~~in ~~Company~~our ~~also~~opinion, are ~~changed~~necessary ~~its~~for ~~fiscal~~a ~~year~~fair ~~end~~presentation ~~from~~of ~~March~~the 31financial toresults ~~June~~for 30the interim periods presented. InCertain ~~November~~information ~~2005,~~and ~~the~~notes normally included in annual ~~Company~~financial ~~acquired~~statements ~~ip-Colo,~~have ~~Inc.,~~been condensed in aor ~~reorganization,~~omitted afrom ~~development~~these ~~stage~~interim ~~corporation~~financial ~~(herein~~statements ~~referred~~pursuant to assuch ~~“ip-Colo”)~~rules and regulations. OnThese ~~the~~condensed consolidated ~~date~~financial ofstatements should be read in conjunction with the ~~reorganization,~~consolidated ~~the~~financial ~~Company,~~statements aand ~~non-operating~~related ~~entity~~notes ~~without~~for ~~any~~the ~~assets~~year orended June 30, ~~liabilities~~2011, ~~was~~together towith ~~provide~~our ~~advanced~~discussion ~~wireless~~and ~~technologies~~analysis ~~integrated~~of ~~with~~financial condition and ~~high-speed~~results ~~internet~~of operations, ~~via~~included ~~satellite,~~in ~~and~~our toAnnual ~~provide~~Report ~~real~~on Form 10-~~time~~K ~~security~~filed ~~and~~on ~~monitoring~~October ~~for~~5, ~~many~~2011 ~~industries~~with Securities and Exchange Commission.

~~The~~Our ~~Company~~accounting ~~provides~~and ~~a diverse~~financial ~~line~~reporting ofpolicies ~~cutting~~conform ~~edge products and services~~ to ~~meet~~accounting ~~the~~principles ~~growing~~and ~~needs~~practices ~~of the~~generally ~~security~~accepted ~~industry.~~in ~~To meet~~ the ~~ever~~United ~~changing~~States ~~needs~~ of ~~the~~America. ~~industry,~~The weaccompanying ~~have~~consolidated ~~launched~~financial astatements ~~combination~~include ~~of state-of-~~the ~~art~~accounts ~~products~~of HS3 and ~~services~~its ~~that include~~controlled ~~digital~~subsidiaries. ~~video~~All ~~recording~~significant ~~technology~~inter-company ~~(DVR),~~accounts ~~personal~~and ~~biometric~~transactions ~~identification units,~~have ~~CCTV, video monitoring centers, cellular networks, wireless mesh network~~been ~~units~~eliminated ~~and~~in ~~wireless~~the ~~internet-linked~~preparation ~~satellite surveillance systems. This combination~~ of ~~products~~the ~~encompasses~~accompanying acondensed ~~total line that we believe will meet many~~consolidated ~~commercial,~~financial ~~agricultural, governmental, and residential customer security needs~~statements.

~~(b)~~ The ~~Basis~~preparation of ~~presentation~~financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and ~~use~~assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

The accompanying unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these statements reflect adjustments (~~consisting only of normal recurring entries~~c), ~~which~~Cash ~~in our opinion, are necessary for a fair presentation of the financial results for the interim periods presented. Certain information~~ and ~~notes~~cash ~~normally~~equivalents included in annual financial statements have been condensed in or omitted from these interim financial statements pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended June 30, 2010, together with our discussion and analysis of financial condition and results of operations, included in our Annual Report on Form 10-K filed on September 29, 2010 with Securities and Exchange Commission.

~~Our~~We ~~accounting~~consider ~~and~~all ~~financial~~short-term ~~reporting~~investments ~~policies~~with ~~conform~~a toremaining ~~accounting~~maturity ~~principles and practices generally accepted in the United States~~ of ~~America.~~three ~~The~~months ~~accompanying~~or ~~consolidated financial~~less ~~statements~~at ~~include~~ the ~~accounts~~date of ~~HS3 and its controlled~~ ~~subsidiaries.~~purchase ~~All~~to ~~significant~~be ~~inter-company~~cash ~~accounts and transactions have been eliminated in the preparation of the accompanying condensed consolidated financial statements~~equivalents.

~~The~~(d) preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assetsFurniture, ~~stock-based~~Fixtures ~~compensation~~ and ~~deferred~~Equipment income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

9 Furniture, fixtures and equipment are recorded at historical cost, net of accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives (3-5 years). Expenditures for maintenance and repairs are charged to expense.

(ce) ~~Cash~~Inventory ~~and cash equivalents~~

WeInventory ~~consider~~consists ~~all~~of ~~short-term~~finished ~~investments~~goods ~~with~~purchased afrom ~~remaining~~third-party ~~maturity~~manufacturers ofand ~~three~~component ~~months~~parts orand ~~less~~is valued at the ~~date~~lower of average cost or market. Average cost is determined using the ~~purchase~~first-in, tofirst-out bemethod ~~cash~~of ~~equivalents~~accounting.

~~(d)~~9 ~~Furniture, Fixtures and Equipment~~

~~Furniture, fixtures and equipment are recorded at historical cost, net of accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives~~ (~~3-5 years~~f). ~~Expenditures~~Long-lived ~~for~~Assets ~~maintenance and repairs are charged to expense.~~

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with Financial Accounting Standards Board (e“FASB”) ~~Inventory~~Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition.

~~Inventory~~(g) ~~consists~~Loss ofPer ~~finished goods~~Share ~~purchased from third-party manufacturers and component parts and is valued at the lower of average cost or market. Average cost is determined using the first-in, first-out method of accounting.~~

Basic and diluted earnings (floss) per ~~Long-lived~~share ~~Assets~~are computed using the weighted average number of shares outstanding during the period. Diluted earnings per share gives effect to all potential diluted common shares outstanding during the period. In periods of net loss, there are no diluted earnings per share since the result would be anti-dilutive.

~~Long-lived~~(h) ~~assets~~Financial ~~are~~Instruments reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition.

~~(g)~~ The ~~Loss~~fair ~~Per~~value ~~Share~~of financial instruments is determined at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be ascertained with precision. Changes in assumptions can significantly affect estimated fair values.

~~Basic~~The ~~and~~carrying ~~diluted~~value ~~earnings (loss) per share are computed using the weighted average number~~ of ~~shares~~cash ~~outstanding~~and ~~during~~cash ~~the~~equivalents, ~~period.~~accounts ~~Diluted~~payable ~~earnings~~and ~~per~~accrued ~~share~~liabilities ~~gives~~approximate ~~effect to all potential~~their ~~diluted~~fair ~~common~~value ~~shares~~because ~~outstanding~~of ~~during~~ the ~~period.~~short-term Innature ~~periods~~ of ~~net~~these ~~loss, there are no diluted earnings per share since the result would be anti-dilutive~~instruments.

(hi) ~~Financial~~Income ~~Instruments~~Taxes

The ~~fair~~Company ~~value~~follows ASC subtopic 740-10 (formerly Statement of ~~financial~~Financial Accounting Standard No. 109, ~~instruments~~(“Accounting isfor ~~determined~~Income atTaxes”) afor ~~specific~~recording ~~point~~the inprovision ~~time~~for income taxes. ASC 740-10 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, ~~based~~deferred ontax ~~relevant~~assets and ~~information~~liabilities ~~about~~are computed based upon the difference between the financial statement ~~markets~~and income tax basis of assets and ~~specific~~liabilities ~~financial~~using ~~instruments.~~the Asenacted marginal ~~these~~tax rate applicable when the related asset or liability is expected to ~~estimates~~be realized or settled. Deferred income tax expenses or benefits are ~~subjective~~based on the changes in ~~nature,~~the ~~involving~~asset ~~uncertainties~~or ~~and~~liability ~~matters~~each period. If available evidence suggests that it is more likely than not that some portion of all of the ~~significant~~deferred ~~judgment,~~tax ~~they~~assets ~~cannot~~will not be ~~ascertained~~realized, ~~with~~a ~~precision~~valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. ~~Changes~~Future changes in such valuation allowance are included in the ~~assumptions~~provision ~~can~~for ~~significantly~~deferred ~~affect~~income ~~estimated~~taxes ~~fair~~in ~~values~~the period of change.

~~The~~Deferred ~~carrying~~income ~~value~~taxes ofmay ~~cash~~arise from temporary differences resulting from income and expense items reported for ~~cash~~financial ~~equivalents~~accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, ~~accounts~~depending ~~payable~~on ~~and~~the ~~accrued~~classification of assets and liabilities ~~approximate~~to ~~their~~which they relate. Deferred taxes arising from temporary ~~fair~~differences ~~value~~that ~~because~~are ofnot ~~the~~related ~~short~~to an asset or liability are classified as current or non-~~term~~current ~~nature~~depending ofon ~~these~~the ~~instruments~~periods in which the temporary differences are expected to reverse.

(ij) ~~Income~~Equity-Based ~~Taxes~~Compensation

WeCommon ~~recognize~~stock, ~~deferred~~warrants, ~~tax~~and ~~liabilities~~options ~~and~~issued ~~assets~~ for ~~the~~services ~~expected~~are ~~future~~accounted ~~tax~~for ~~consequences~~based ofon ~~events~~the ~~that have~~fair ~~been~~market ~~recognized~~value inat the date the ~~Company’s~~services ~~consolidated~~are ~~financial~~performed. ~~statements~~If ~~and~~the ~~tax returns~~awards ~~using~~are ~~the~~based ~~liability~~on ~~method.~~a ~~Under~~vesting ~~this~~period the ~~method,~~fair ~~deferred~~market ~~tax~~value ~~liabilities and~~of ~~assets~~the ~~are~~awards is determined ~~based~~as onvesting ~~the~~is ~~temporary~~earned. ~~differences~~If ~~between~~ the ~~consolidated~~services ~~financial~~are ~~statements~~to ~~and~~be ~~tax~~performed ~~bases~~over ofan ~~assets~~extended ~~and~~period ~~liabilities~~of ~~using enacted~~time, ~~tax~~the ~~rates~~value inis amortized ~~effect~~over in the ~~years~~life inof ~~which~~ the ~~differences~~period ~~are~~that ~~expect~~services ~~to reverse~~are performed.

(jk) ~~Equity-Based~~Concentration ~~Compensation~~of Credit Risk

~~Common~~We ~~stock,~~sell ~~warrants,~~products ~~and options~~to ~~issued~~customers ~~for~~in diversified ~~services~~industries ~~are~~and ~~accounted~~geographical ~~for~~regions. ~~based~~We oncontinually evaluate the creditworthiness ~~fair~~of ~~market~~our ~~value~~customers. ~~at the~~We ~~date~~evaluate the ~~services~~collectability ~~are~~of ~~performed.~~accounts receivable Ifon ~~the~~a ~~awards~~combination ~~are~~of ~~based~~factors. onOur apolicies ~~vesting~~require ~~period~~us to write off or ~~the~~record ~~fair~~specific ~~market~~reserve ~~value~~if we become aware of ~~the~~anything ~~awards~~that iswould ~~determined~~cause asus ~~vesting~~to question isa ~~earned.~~specific Ifcustomer’s ~~the services~~inability ~~are~~to meet their financial obligations to us. beWe ~~performed~~will ~~over~~write anoff ~~extended~~receivables ~~period~~when ofwe ~~time~~believe ~~the~~an ~~value~~amount ~~(if~~is not collectible. ~~material)~~We ishave ~~amortized~~approximately ~~over~~$16,000 ~~the~~reserves ~~life~~for ofbad ~~the~~debt ~~period~~as ~~that~~of ~~services~~September ~~are~~30, ~~performed~~2011.

10(l) Revenue Recognition

~~(k)~~ We ~~Concentration~~record revenue when persuasive evidence of ~~Credit~~an ~~Risk~~arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

We10 sell products to customers in diversified industries and geographical regions. We continually evaluate the creditworthiness of our customers. We evaluate the collectability of accounts receivable on a combination of factors. Our policies require us to record specific reserve if we become aware of anything that would cause us to question a specific customer’s inability to meet their financial obligations to us. We will record a specific reserve for bad debts to reduce a related receivable when we believe an amount is not collectible. We do not have any reserves for bad debt as of March 31, 2011.

(lm) ~~Revenue~~Recent ~~Recognition~~Pronouncements

WeIn ~~record~~January ~~revenue~~2010, ~~when~~FASB ~~persuasive~~issued ASU ~~evidence~~No. 2010-06 – Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of anLevels ~~arrangement~~1 ~~exists~~and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), ~~services~~a ~~have~~reporting entity ~~been~~should ~~rendered~~present orseparately ~~product~~information about purchases, sales, issuances, ~~delivery~~and ~~has~~settlements ~~occurred~~(that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarifies existing disclosures as follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the ~~sales~~statement ~~price~~of financial position. A reporting entity needs to use judgment in determining the ~~customer~~appropriate isclasses ~~fixed~~of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or ~~determinable~~Level 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements ~~collectability~~in isthe ~~reasonably~~roll ~~assured~~forward of activity in Level 3 fair value measurements. These disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s financial statements.

~~(m)~~ In ~~Reclassifications~~February 2010, FASB issued ASU No. 2010-9 - Amendments to Certain Recognition and Disclosure Requirements. This update addresses certain implementation issues related to an entity’s requirement to perform and disclose subsequent-events procedures, removes the requirement that public companies disclose the date of their financial statements in both issued and revised financial statements. According to the FASB, the revised statements include those that have been changed to correct an error or conform to a retrospective application of U.S. GAAP. The amendment is effective for interim and annual reporting periods in fiscal year ending after June 15, 2010. The adoption of this ASU did not have a material impact on the Company’s financial statements.

~~Certain~~ In ~~amounts~~December 2010, the FASB issued Accounting Standards Update No. 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations (Topic 805)—Business Combinations (ASU 2010-29), to improve consistency in how the ~~prior~~pro ~~periods~~forma ~~have~~disclosures ~~been~~are calculated. ~~reclassified~~Additionally, ASU 2010-29 enhances the disclosure requirements and requires description of the nature and amount of any material, nonrecurring pro forma adjustments directly attributable to a business combination. ASU 2010-29 ~~conform~~is effective for us in fiscal 2011 and should be applied prospectively to business combinations for which the ~~current~~acquisition ~~period~~date is after the effective date. Early adoption is permitted. The adoption of the ASU did not have a material impact on the Company’s ~~presentation~~financial statements.

2 In May, 2011, The FASB issued ASU 2011-4, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. ~~GOING~~GAAP ~~CONCERN~~and IFRS. The objective of this amendment is to achieve common fair value measurement and disclosure requirements in U.S GAAP and IFRS. This amendment is to ensure that fair value has the same meaning in U.S. GAAP and IFRS and that their respective fair value measurement and disclosure requirements are the same. This guidance is effective for the first quarter of 2012. The Company does not expect that this authoritative guidance will have any material effect on the Company’s financial statements.

The ~~accompanying~~Company ~~condensed consolidated~~has ~~financial~~considered ~~statements have been prepared assuming that we will~~all ~~continue~~new asaccounting apronouncements ~~going~~and ~~concern.~~has ~~Our~~concluded ~~ability~~that tothere ~~continue~~are asno ~~a going concern is~~new ~~dependent~~pronouncements ~~upon~~that usmay ~~obtaining~~have ~~additional~~a ~~working~~material ~~capital~~impact toon ~~develop~~results ~~our~~of ~~business~~ operations~~. We intend to use borrowings and/or security sales to mitigate the~~, ~~effects~~financial ~~of our cash position; however~~condition, ~~no assurance can be given that debt~~ or ~~equity~~ ~~financing,~~cash ~~if and when required~~flows, ~~will~~based beon ~~available.~~current The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue in existenceinformation.

3.(n) ~~OTHER~~Reclassifications ~~ACCRUED LIABILITIES~~

~~Other~~ Certain ~~accrued~~amounts ~~liabilities~~in ~~are~~the asprior periods ~~follows:~~have been reclassified to conform to the current period’s presentation

		March 31 ,		June 30,
		2011		2010
Accrued board fees	$	170,832	$	133,332
Accrued salaries, officers		80,000		80,000
Accrued liabilities, related parties		76,535		61,505
Accrued interest		237,572		218,176
Payroll liabilities		14,088		1,569
Sales tax payable		1,121		528
	$	580,148	$	495,110

2. GOING CONCERN

~~Board~~The ~~fees~~accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. Our ability to ~~the~~continue ~~two~~as ~~independent~~a going concern is ~~board~~dependent ofupon ~~directors~~us ~~are~~obtaining ~~$25,000~~additional ~~annually.~~working ~~The~~capital ~~board~~to ~~members~~develop ~~have~~our ~~the~~business operations. ~~option~~We intend to use borrowings from our revolving line of credit ~~receive~~facility, ~~cash~~equity sales and/or ~~convert~~further ~~into~~shareholder ~~common~~loans ~~stock~~and atadvances from related parties to mitigate the ~~rate~~affects of ~~$0.12~~our cash position; however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the ~~rate~~recoverability and classification of recorded assets and classification ~~the~~of ~~last~~liabilities ~~conversion~~that ~~agreement~~might be necessary should we be unable to continue as a going concern.

~~The~~11 ~~Company leases office space from a company owned by an officer/director. The Company has accrued $76,535 as a related party liability.~~

~~Accrued~~3. ~~interest~~FIXED ~~represents interest~~ASSETS ~~on the subordinated notes payable and up to the time (November 24, 2009) in which the convertible notes payable were converted into equity.~~

11 Fixed assets consisted of the following:

4. SUBORDINATED NOTES PAYABLE

		September 30,			June 30,
		2011			2011

Computer hardware	$	122,448		$	118,978
Leasehold improvements		10,500			10,500
Opie/VMS installed		11,295			11,295
Vehicles		23,992			23,992
		168,235			164,765
Accumulated depreciation		(144,170	)		(139,150	)
	$	24,065		$	25,615

AtDuring ~~March~~the 31quarter ended September 30, 2011, ~~the following subordinated notes payable are outstanding: The notes bear interest at 12%~~ and ~~are~~ on2010, adepreciation ~~month~~expense towas ~~month term. The Company recorded~~ $195,~~396~~019 ~~interest~~and ~~for the quarter ended March 31~~$7, ~~2011~~550 respectively.

William S. Dickey	$	575,000
Robert A. Morrison		80,500
	$	655,500

4. OTHER ACCRUED LIABILITIES

5. Other ~~LONG-TERM~~accrued ~~DEBT~~liabilities are as follows:

In February and March 2008 the Company, pursuant to a loan and security agreement, entered into two (2) $200,000 promissory notes. In addition, the Company issued to the lender a warrant for the purchase of one million (1,000,000) shares of common stock at a purchase price of $.12 per share with an expiration date of five (5) years after the commencement date of the first loan.

		September 30,		June 30,
		2011		2011

Accrued board fees	$	12,500	$	-
Accrued interest		-		-
Payroll liabilities		39,247		25,081
Sales tax payable		2,552		40
	$	54,299	$	25,121

~~The~~Board ~~notes~~fees ~~have~~to anthe ~~interest~~two ~~rate~~independent board of ~~15.499%~~directors ~~and~~are ~~mature~~$25,000 inannually. ~~three~~The ~~(3)~~board ~~years~~members ~~from~~have the ~~commencement~~option ~~date, and are~~to ~~collateralized~~receive ~~with~~cash ~~the~~or ~~Company’s~~convert ~~personal~~into ~~property~~common asstock ~~defined~~at in the ~~loan~~rate ~~and security~~of ~~agreement~~$0.12 ~~For~~or the ~~three~~rate ~~months~~of the ~~ended~~last ~~December~~conversion 31agreement. Subsequent to September 30, ~~2010~~2011, we ~~recorded~~paid approximately $133,~~735~~000 asand ~~interest~~$8,000 ~~expense~~of ~~pursuant~~the topayroll ~~the~~liabilities ~~notes~~and board fees, respectively.

~~Each note also has a final payment fee of $14,000 that is due on the earlier to occur of the maturity date or prepayment~~5. ~~These~~SUBORDINATED ~~fees~~NOTES ~~are~~PAYABLE ~~being amortized over the life of the loans with the obligation reflected in other long-term liabilities. For the three-months ended December 31, 2010, we amortized $1,555.~~

~~The~~Subordinated ~~$400,000~~notes ~~proceeds were~~payable ~~allocated~~outstanding toare ~~each~~as ~~instrument based on the fair market value of each based on the Black-Scholes pricing model. The assumptions used in valuing the warrants were~~follows: ~~stock~~\ price $.13; exercise price $.12, life – 5 years; volatility 101.17%; dividend yield 0%; and the yield of a risk free investment 3.08% . We determined the fair value of the note and interest to be $400,000 and the fair market value of the warrants to be $16,814. We allocated the proceeds to each based on the respective percentages of total value. The value of the notes was $383,865 and the warrants $16,135.

On December 30, 2010 the Company entered into a loan payment modification/settlement agreement with the lender in which we paid $65,000 as a one-time payment and will pay a remaining balance of $36,000 as the settlement of the outstanding balance and accrued interest on these notes. The discount on the notes was accrued into interest expense through the date of the settlement agreement. For the nine months ended March 31, 2011 we recorded $2,689 as additional interest expense and amortized $5,833 of other assets. The lender also subordinated to our subordinated notes payable. The $36,000 will be paid at $3,000 a month through January 10, 2012 at zero interest.

		September 30, 2011		June 30, 2011


William S. Dickey	$	500,000	$	550,000
Robert A Morrison		68,000		75,000
Charles Ferris		17,000		18,770
Michael Yinger		25,000		27,500
Greg Dickey		20,000		20,000
Mira Fine		20,000		20,000
	$	650,000	$	711,270

6 Expense on these notes bear interest at 12% and are on a month to month term. ~~NOTE~~The ~~PAYABLE~~Company recorded $20,898 interest for the quarter ended September 30, 2011.

On12 December 17, 2010, the Company entered into a one year promissory note with a commercial bank. The note is a revolving line of credit, wherein the Company can receive advances up to $250,000. The note bears interest at 3.85% and is guaranteed pursuant to a Guaranty Fee Agreement between William S. Dickey and the Company, wherein the Company pays Mr. Dickey a monthly fee of $1,250 to provide the guaranty. At March 31, 2011 the Company had $245,000 outstanding on this line of credit.

126. LONG-TERM DEBT

7 In February and March 2008 the Company, pursuant to a loan and security agreement, entered into two (2) $200,000 promissory notes. ~~COMMON~~In ~~STOCK~~addition, the Company issued to the lender a warrant for the purchase of one million (1,000,000) shares of common stock at a purchase price of $.12 per share with an expiration date of five (5) years after the commencement date of the first loan. The notes had an interest rate of 15.499% and matured in three (3) years from the commencement date, and were collateralized with the Company’s personal property as defined in the loan and security agreement. Each note also had a final payment fee of $14,000 that was due on the earlier to occur of the maturity date or prepayment.

~~During~~On ~~fiscal~~December ~~year~~30, ~~ended~~2010 ~~June~~the ~~30,~~Company ~~2009~~entered into a loan payment modification/settlement agreement with the lender in which we: (paid $65,000 as a) ~~issued~~one-time 1payment and will pay a remaining balance of $36,~~800,~~000 ~~shares~~as the settlement of ~~our~~the ~~common~~outstanding ~~stock~~balance ~~for~~and ~~financial~~accrued ~~services~~interest on ~~rendered~~these notes. The lender also subordinated to usour ~~(valued~~subordinated atnotes payable. The $3236,000) ~~and~~will ~~(b)~~be ~~issued~~paid ~~250~~at $3,000 ~~shares~~a ofmonth ~~our~~starting ~~common stock~~February ~~for~~10, ~~cancellation~~2011 ofthrough January ~~$21~~10,~~592~~ of2012 ~~accounts~~at ~~payable~~zero ~~to a third party~~interest.

~~During~~7. ~~fiscal~~NOTE ~~year~~PAYABLE ended June 30, 2010 we: (a) issued 4,500,000 shares of our common stock for $225,000 which was used to repay $150,000 of convertible and subordinated notes payable; (b) issued 15,500,000 shares of our common stock to convert $775,000 of convertible notes payable; (c) issued 5,870,834 shares of our common stock to two officers for cancellation of $181,996 of accrued salaries, and (d) issued 250,000 shares of our common stock for services rendered to us.

On ~~February~~December 2817, 2010, the ~~Board~~Company ~~voted~~entered tointo ~~issue~~a ~~600,000~~one ~~shares~~year promissory note with a commercial bank. The note is a revolving line of ~~our~~credit, ~~common~~wherein ~~stock~~the ~~for~~Company ~~financial~~can ~~consulting~~receive advances up to ~~services~~$250,000. ~~rendered~~The note bears interest at 3.85% and is guaranteed pursuant to usa Guaranty ~~effective~~Fee ~~February~~Agreement 1,between ~~2010~~William S. WeDickey ~~valued~~and the ~~600~~Company,~~000~~ ~~shares~~wherein the ~~based~~Company onpays ~~the~~Mr. ~~quoted~~Dickey ~~trade~~a ~~price~~monthly onfee ~~February~~of $1,250 ~~2010~~to ($provide the guaranty.~~04)~~ ~~and~~At September ~~recorded~~30, 2011 the Company had $24150,000 as ~~contract~~outstanding ~~services.~~on Asthis line of credit. Subsequent to September 30, ~~2010~~2011, ~~these~~we ~~shares~~have ~~are~~borrowed ~~owed,~~an ~~but~~additional ~~not~~$30,000 under ~~issued~~the line of credit. ~~These~~We ~~shares~~are ~~were~~currently ~~issued~~having ondiscussions ~~October~~with 4,the ~~2010~~commercial bank to extend the maturity date of the promissory note for another year.

~~On October 4, 2010 the Board voted to issue 600,000 share of our common stock for financial consulting services rendered to us~~8. WeINCOME ~~valued~~TAXES ~~the 600,000 shared based on the quoted trade price on October 4, 2010 ($.0097) and recorded $5,820 as contract services.~~

OnThe ~~March~~Company 1,follows ~~2011~~ASC subtopic 740-10 (formerly Statement of Financial Accounting Standard No. 109, (“Accounting for Income Taxes”) for recording the ~~Company~~provision for income taxes. ~~issued~~ASC ~~500,000~~740-10 ~~shares~~requires the use of ~~our~~the ~~common~~asset ~~stock~~and toliability amethod ~~new~~of ~~employee~~accounting for income taxes. WeUnder ~~valued~~the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial ~~500,000~~statement ~~shares~~and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the ~~quoted~~asset ~~trade~~or ~~price~~liability oneach ~~March~~period. 1If available evidence suggests that it is more likely than not that some portion of all of the deferred tax assets will not be realized, ~~2011~~a ($valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.~~012)~~ ~~and~~Future changes in such valuation allowance are included in the ~~recorded~~provision ~~$6,000~~for asdeferred ~~contract~~income ~~services~~taxes in the period of change.

~~Pursuant~~Deferred toincome ~~the~~taxes ~~2005~~may ~~Stock~~arise from ~~Option~~temporary differences resulting from income and expense items reported for ~~Plan,~~financial ~~the~~accounting ~~Board~~and oftax ~~Directors~~purposes ~~had~~in ~~granted~~different 2periods. Deferred taxes are classified as current or non-current,~~500,000~~ ~~options~~depending ~~under~~on the ~~plan~~classification of assets and liabilities to which they relate. AtDeferred taxes arising from temporary ~~March~~differences ~~31,~~that ~~2011,~~are ~~1,300,000~~not ~~options~~related ~~(with~~to an ~~exercise~~asset ~~price~~or ofliability ~~$.1667)~~ are classified as ~~outstanding~~current ~~which~~or ~~expire~~non-current depending on the periods in ~~March~~which ~~2012~~the temporary differences are expected to reverse.

8 As of June 30, 2011, the Company has net operating loss carry-forwards which may or may not be used to reduce future income taxes payable. ~~SUBSEQUENT~~Current ~~EVENTS~~Federal Tax Law limits the amount of loss available to offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. A valuation allowance has been recorded to reduce the net benefit recorded in the financial statements related to this deferred asset. The valuation allowance is deemed necessary as a result of the uncertainty associated with the ultimate realization of these deferred tax assets.

In13 ~~April 2011, the Company borrowed a total of $40,000 from two private investors pursuant to similar subordinated notes. The notes bear interest at 12% and are on a month to month term.~~

~~On March 4, 2011 we announced that Mr~~9. ~~Gilliam~~COMMON ~~had~~STOCK signed a letter of intent for the acquisition of WizardWorks by our company. In furtherance of the transaction contemplated in the letter of intent, on April 27, 2011 our company entered into a Teaming Agreement and Employment Agreement (the “Agreement”) with Chester A. Gilliam and his company WizardWorks Security Systems Inc. (the “Subcontractor”). Under the Agreement the Subcontractor will provide us with products and services set out in the Agreement (the “Program”) and our company will compensate the Subcontractor for participation in the Program by providing a $360,000 bonus and the concurrent issuance of 500,000 shares of our company’s common stock as follows:

~~The~~ During ~~$360,000~~fiscal ~~bonus~~year ~~will~~ended beJune ~~divided into three annual installments equal to~~30, ~~the~~2010 ~~lesser~~we: of(a) ~~$120~~issued 4,500,000 ~~per~~shares ~~annum~~of orour ~~50%~~common ofstock ~~the~~for ~~revenue~~$225,000 ~~received~~which ~~from~~was ~~WizardWorks~~used ~~accounts~~to ~~during~~repay ~~that~~$150,000 ~~period. The Program bonus will be paid at the end~~ of ~~each~~convertible ~~calendar~~and ~~quarter.~~subordinated Ifnotes ~~during~~payable; ~~any~~(b) ~~quarter the total revenue received~~issued ~~from WizardWorks accounts is less than $60~~15,~~000~~500,000 ~~the~~shares ~~installment~~of ~~for~~our ~~that quarter~~common ~~will~~stock ~~be calculated~~ to ~~minimally~~convert ~~equal~~$775,000 ~~50%~~ of ~~the~~convertible ~~total revenues~~notes ~~received~~payable; ~~from~~(c) ~~WizardWorks.~~issued If5,870,834 ~~over~~shares ~~the~~of ~~three~~our ~~year~~common ~~term~~stock ~~the~~to ~~amount~~two ~~paid~~officers tofor ~~WizardWorks~~cancellation isof ~~less than~~ $~~360~~181,~~000~~996 ~~this~~of ~~agreement~~accrued ~~will~~salaries, ~~continue~~and ~~for~~(d) ~~one~~issued ~~year increments~~250,000 ~~until~~shares ~~paid.~~of our ~~Our~~common ~~company~~stock ~~has~~for ~~the~~services ~~sole~~rendered ~~right~~ to ~~accelerate payments to reach the agreed $360,000 at any time during the term~~us.

~~The~~ On ~~issuance~~October of4, ~~500~~2010 the Board voted to issue 600,000 shares of our ~~company’s~~ common stock onfor ~~execution~~financial consulting ofservices rendered to us. We valued the ~~Agreement;~~600,000 shares based on the quoted trade price on October 4, 2010 ($.0097) and recorded $5,820 as stock for services expense.

In On ~~consideration~~April ~~for~~1, 2011 the ~~above,~~Board ~~our~~voted and the company ~~will~~issued ~~receive~~600,000 shared of our common stock to an employee. We ~~record~~valued the 600,000 ~~and~~shares ~~dispense~~based ~~all~~on ~~revenue~~the ~~from~~quoted ~~WizardWorks~~trade asprice ofon ~~January~~April 1, 2011 ($0.012) and ~~may invoice~~recorded ~~customers~~$7, ~~under~~200 ~~the~~as ~~WizardWorks~~stock ~~name~~for orservices ~~our company’s name~~expense.

At On April 27,2011 our company entered into a teaming agreement and employment agreement with Chester A. Gilliam and his company WizardWorks Security Systems Inc. (the ~~completion~~“Subcontractor”). Under ofthe agreement the Subcontractor will provide us with products and services set out in the agreement (the “Program”) over a three (3) year period and the company will compensate the Subcontractor for participation in the Program by providing up to a $360,000 bonus ~~payments~~and the company issued on March 1, 2011 500,000 shares of our company’s ~~has~~common stock pursuant to the agreement. We valued the ~~right~~500,000 toshares ~~assume~~based on the ~~WizardWorks~~quoted ~~name~~trade price on March 1, 2011 ($.012) and recorded ~~logo~~$6,000 as stock for $1services expense.~~00.~~

13 Pursuant to the 2005 Stock Option Plan, the Board of Directors had granted 2,500,000 options under the plan of which 1,300,000 were outstanding as of March 31, 2011. Effective June 24, 2011, the Board accepted the cancellation of the 1,300,000 stock options from three (3) employees, (with an exercise price of $.1667 per share) which were to expire on March 22, 2012.

~~Our company will pay the Subcontractor $400 per month rent for the uses of the Subcontractor’s premises~~10. ~~Upon~~CONCENTRATIONS ~~thirty~~AND ~~day~~CONTINGENCIES ~~written notice we may vacate premises, remove all equipment and terminate the rental arrangement.~~

~~Item~~ We 2lease our office premises on a month to month basis from an officer of the company. ~~Management’s~~We ~~Discussion~~incur monthly utilities and ~~Analysis~~trash removal. In addition, pursuant to the teaming agreement, we lease from the subcontractor the use of ~~Financial~~his ~~Condition~~shop premises for $400 per month. Sales to one major customer represented 94% of revenue and ~~Results~~74% of ~~Operations~~accounts receivables for the quarter ended September 30, 2011.

~~Critical~~11. ~~Accounting~~SUBSEQUENT ~~Polices~~EVENTS ~~and Estimates~~

~~The~~Management ~~following~~has ~~discussion and~~evaluated ~~analysis~~subsequent ofevents through the ~~results~~date ofthese ~~operations~~financial ~~and~~statements ~~financial~~were ~~condition~~issued ~~should~~and has bedetermined ~~read~~that ~~in conjunction~~there ~~with~~are ~~the~~no ~~accompanying~~transactions ~~unaudited~~that ~~condensed~~need ~~consolidated~~to ~~financial~~be recorded or ~~statements~~disclosed.

A14 summary of the significant accounting policies that we have adopted and followed in the preparation of our condensed consolidated financial statements is detailed in our consolidated financial statements for the year ended June 30, 2010, included in our Annual Report on Form 10-K filed on September 29, 2010.

~~Our~~ITEM ~~financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States~~2. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by managementManagement’s ~~application~~Discussion ~~of accounting policies. We believe that understanding the basis~~ and ~~nature~~Analysis of ~~the~~Financial ~~estimates~~Condition and ~~assumptions~~Results ~~involved with the following aspects~~ of ~~our financial statements is critical to an understanding of our financials.~~ Operations

WeThe ~~base~~following ~~our~~discussion ~~assumptions~~ and ~~estimates~~analysis onof ~~historical experience and other sources that we believe to be reasonable at~~ the ~~time. Actual~~ results ~~may~~of ~~vary~~operations ~~from~~and ~~our~~financial ~~estimates~~condition ~~due~~should ~~to changes~~be inread ~~circumstances, weather, politics, global economics, mechanical~~in ~~problems,~~conjunction ~~general~~with ~~business conditions and other factors. Our significant estimates are related to~~ the ~~valuation~~accompanying ofunaudited ~~our~~condensed ~~stock~~consolidated ~~issued for services,~~financial ~~warrants and options~~statements.

~~Corporate~~ Our ~~History~~financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

We ~~were~~base ~~incorporated~~our ~~under~~assumptions ~~the~~and ~~laws~~estimates ~~of the State of Nevada~~ on ~~January~~historical ~~28,~~experience ~~2003~~and ~~under~~other ~~the~~sources ~~name~~that ~~Zeno, Inc. On November 9, 2005,~~ we ~~closed~~believe onto anbe reasonable ~~asset~~at ~~purchase~~the ~~agreement with IP-Colo, Inc~~time. ~~(IPC)~~ ~~wherein~~Actual weresults ~~acquired~~may ~~all~~vary offrom ~~the~~our ~~assets~~estimates ofdue ~~IPC.~~to changes ~~IPC was~~ in ~~the~~circumstances, ~~development stage~~weather, ofpolitics, ~~providing~~global ~~advanced wireless technologies~~economics, ~~integrated with high-speed~~mechanical ~~internet~~problems, ~~via~~general ~~satellite~~business toconditions ~~provide real-time security~~ and ~~monitoring~~other ~~for many industries~~factors. OnOur orsignificant estimates ~~about~~are ~~October~~related ~~10,~~to ~~2005,~~the wevaluation ~~changed~~of our ~~name~~stock toissued ~~HS3 Technologies~~for services, warrants ~~Inc~~and options.

OnCorporate ~~November 4, 2009, at the annual and special meeting of stockholders of our company, our authorized capital increased to 200,000,000 shares of common stock with a par value of $0.001.~~History

~~Current~~ We ~~Business~~were incorporated under the laws of the State of Nevada on January 28, 2003 under the name Zeno, Inc. On November 9, 2005, we closed on an asset purchase agreement with IP-Colo, Inc. (IPC) wherein we acquired all of the assets of IPC. IPC was in the development stage of providing advanced wireless technologies, integrated with high-speed internet via satellite to provide real-time security and monitoring for many industries. On or about October 10, 2005, we changed our name to HS3 Technologies, Inc.

~~Our~~ On ~~company~~September ~~has~~6, ~~expanded~~2006, ~~its~~we effected one ~~technical~~(1) ~~installation~~new ~~service~~for four (4) old reverse stock split of our authorized, issued and outstanding stock. As a result, our authorized capital decreased to 50,000,000 shares of common stock with a ~~focus~~par onvalue ~~the~~of ~~Quick~~$0.001 ~~Serve~~each ~~Restaurant~~and ~~market~~2,500,000 preferred ~~(QSR)~~stock with a par value of $0.001 each.

Effective ~~December~~February 101, ~~2010~~2009, we ~~entered~~ ~~into~~ signed a ~~master~~ten ~~subcontract~~(10) year agreement with ~~Insight~~the ~~Direct~~130 ~~USA,~~year ~~Inc.,~~old anAmerican Humane Association ~~Illinois~~(AHA). ~~corporation,~~HS3 and ~~its~~AHA’s ~~affiliate~~relationship ~~Calence,~~was ~~LLC~~to ~~dba~~create ~~Insight~~a ~~Networking~~Video Monitoring System which was anticipated by AHA to become a standard part of the American Humane Certified™ program(AHC), which is a voluntary fee-based program available to ~~Delaware~~producers, ~~limited~~processors ~~liability~~and ~~corporation~~haulers of animals raised for food. The AHC program provides independent third-party verification that those businesses treat and care for their animals humanely. Pursuant to the AHA agreement, ~~our~~we ~~company~~were to ~~will~~provide bethe ainstallation, ~~master~~integration, ~~provider~~and monitoring of ~~technical~~production facilities and ~~installation~~the ~~services~~transportation of animals to ~~an internationally~~ensure ~~renowned~~the ~~QSR~~husbandry ~~chain.~~and ~~Our~~transportation ~~company’s~~of the ~~efforts~~animals ~~have~~conforms ~~been~~to ~~refocused toward~~AHC ~~the~~certification ~~services~~standards. ~~required~~Effective byFebruary ~~the~~28, 2010, ~~QSR.~~AHA ~~Under~~terminated the ~~terms~~agreement ofclaiming that the ~~agreement~~Company’s ~~with~~showing of a ~~Insight~~marketing ~~our~~video ~~company~~of ~~will~~animals ~~provide~~at ~~Insight~~a ~~with~~trade ITshow ~~services~~without ~~set~~AHA ~~forth~~written inpermission ~~any~~was an ~~statement~~incurable breach of ~~work~~the ~~issued~~contract. byThe ~~Insight.~~Company ~~Each~~believes ~~statement~~the oftermination ~~work~~by isAHA was a ~~separate agreement~~breach ~~that~~of ~~identifies~~the aagreement ~~specific~~and ~~scope~~on ofApril ~~work~~30, to2010, bethe ~~performed~~parties byentered ~~our~~into a ~~company~~Settlement Agreement And Mutual Release.

~~Under~~On November 4, 2009, at the annual ~~agreement~~and special meeting of stockholders of our company’s, ~~duties~~our ~~include:~~authorized capital increased to 200,000,000 shares of common stock with a par value of $0.001.

~~participating~~During infiscal ~~meetings~~year ~~with~~ended ~~Insight~~June ~~and~~30, ~~clients~~2011 ~~for~~we: ~~whom~~(a) weissued ~~are~~1,700,000 ~~performing~~shares of our common stock for services rendered to us; and (b) issued 12,207,200 shares of our common stock for conversion of accrued board fees, accrued interest, accrued salaries and accrued rent due our officers, directors and largest shareholder.

~~keeping~~Current ~~Insight informed as to progress and any delays in our services;~~ Business

14 Our company has expanded its technical installation service with a focus on the Quick Serve Restaurant market (QSR).

~~providing~~ Effective ~~Insight~~December 10, 2010 we entered into a master subcontract agreement with ~~any~~Insight ~~operational~~Direct ~~information~~USA, ~~on request~~Inc., ~~including~~an ~~time~~Illinois ~~sheets~~corporation, ~~installation~~and ~~scripts~~its affiliate Calence, ~~performance~~LLC ~~logs~~dba Insight Networking, ~~survey~~a Delaware ~~information~~limited liability corporation. Pursuant to the agreement, orour company ~~inventory~~will ~~records~~be ~~related~~a master provider of technical and installation services to ~~its~~an internationally ~~performance;~~renowned QSR chain. Our company’s efforts have been refocused toward the services required by the QSR. Under the terms of the agreement with Insight our company will provide Insight with IT services set forth in any statement of work issued by Insight. Each statement of work is a separate agreement that identifies a specific scope of work to be performed by our company.

~~make~~15 ~~a good faith effort to reach mutually acceptable provisions and adjustments with any statement of work to meet client requirements and expectations;~~

~~ensure~~ Under ~~that~~the agreement our employees, contractors and agents conduct themselves in a professional manner and comply with reasonable requests and standard procedures and policies concerning working hours, safety and security rules applicable to those working at Insight or any clientcompany’s duties ~~facilities~~include:

~~Prices~~• participating in meetings with Insight and clients for whom we are performing services; ~~will~~• ~~be mutually~~keeping ~~agreed~~Insight ~~upon~~informed as to progress and ~~set~~any ~~forth~~delays in our services; • providing Insight with any ~~statement~~operational ofinformation, ~~work~~on request, including time sheets, installation scripts, performance logs, survey information, or ~~purchase~~inventory ~~order issued~~records ~~against~~related ~~such~~to ~~statement~~its ofperformance; ~~work.~~• ~~Insight~~make ~~will~~a ~~pay~~good ~~all~~faith ~~undisputed~~effort ~~invoices within~~to 30reach ~~days~~mutually ofacceptable ~~receipt~~provisions and adjustments with any statement of ~~invoices~~work ~~from~~to meet client requirements and expectations; • ensure that our ~~company~~employees, contractors and ~~shall~~agents ~~receive~~conduct themselves in a ~~3% discount~~professional onmanner ~~any~~and ~~invoices~~comply ~~paid~~with ~~within~~reasonable 10requests ~~days~~and ofstandard ~~receipt.~~procedures and policies concerning working hours, safety and security rules applicable to those working at Insight or any client’s facilities

~~The~~Prices ~~agreement~~for isservices ~~effective~~will ~~until~~be ~~terminated~~mutually onagreed ~~(i)~~upon 45and ~~days~~set ~~prior~~forth ~~written~~in ~~notice~~any bystatement ~~either~~of ~~party~~work toor ~~the~~purchase ~~other (ii)~~order ifissued ~~either~~against ~~party~~such ~~becomes~~statement ~~insolvent,~~of ~~enters~~work. ~~bankruptcy,~~Insight ~~reorganization~~will orpay ~~other~~all undisputed invoices ~~similar~~within ~~proceedings,~~30 ~~admits~~days inof ~~writing~~receipt ~~its~~of ~~inability~~invoices tofrom ~~pay~~our ~~debts,~~company orand ~~makes~~shall orreceive a 3% ~~attempts~~discount toon ~~make~~any aninvoices ~~assignment~~paid ~~for~~within ~~the~~10 ~~benefit~~days of ~~creditors~~receipt.

~~Our~~The ~~company~~agreement is ~~providing~~effective ~~labor;~~until ~~trained~~terminated ~~installation~~on ~~teams~~(i) to45 ~~install~~days ~~cable,~~prior ~~network~~written ~~upgrades~~notice ofby ~~point~~either ofparty ~~sale terminals,~~to ~~install~~the ~~software,~~other ~~and~~(ii) if ~~upgrade~~either ~~servers~~party ~~and~~becomes ~~cameras.~~insolvent, ~~The~~enters ~~service~~bankruptcy, ~~that our~~reorganization ~~company~~or isother similar ~~providing~~proceedings, isadmits ~~necessary~~in ~~for~~writing ~~the~~its ~~QSR~~inability to ~~meet~~pay ~~federally~~debts, ~~mandated Payment~~or ~~Card~~makes ~~Industry~~or attempts ~~Data~~to ~~Security~~make ~~Standards~~an ~~compliant~~assignment ~~requirements~~for ~~assembled by~~ the ~~Payment~~benefit ~~Card~~of ~~Security Standards Council~~creditors.

ToOur ~~date~~company ~~our~~is ~~company’s~~providing labor; trained installation teams ~~have successfully completed installations in ten states from coast~~ to ~~coast~~install ~~servicing~~cable, ~~multiple~~network ~~sites~~upgrades ~~within~~of ~~each~~point ~~market. The teams have provided the position~~ of ~~“clean-up team” provider to our service offering.~~sale ~~Clean-up~~terminals, ~~teams~~install ~~are~~software, ~~responsible~~and ~~for~~upgrade ~~resolving~~servers ~~technical~~ and ~~installation issues left unfinished by other services providers~~cameras. WeThe ~~are~~service ~~very comfortable becoming~~that ~~the~~our ~~“expert”~~company ~~and~~is ~~lead~~providing ~~provider~~is ofnecessary ~~choice~~for to the QSR. Itto ismeet ~~our~~federally ~~ability to~~mandated ~~acquire~~Payment ~~highly~~Card ~~qualified~~Industry ~~individuals~~Data ~~and~~Security ~~allowing~~Standards ~~them~~compliant torequirements ~~excel within our~~assembled ~~company’s~~by ~~structure that continues to keep our company’s in~~ the ~~forefront~~Payment ~~of providing~~Card ~~exceptional~~Security ~~service~~Standards Council.

~~Insight~~To ~~estimates~~date ~~over~~our ~~18,000~~company’s ~~locations~~installation ~~for~~teams ~~the~~have ~~QSR~~successfully ~~will~~completed ~~require~~installations ~~Payment~~in ~~Card~~states ~~Industry Data Security Standards~~from ~~compliant~~coast ~~installation and services~~ to ~~point~~coast ofservicing ~~sale~~multiple ~~terminals~~sites ~~over~~within ~~the~~each ~~next two years~~market. ~~Our~~The ~~master~~teams ~~subcontract agreement entitles us to an initial 3,120~~have ~~locations.~~provided ~~To complete~~ the ~~estimated~~position ~~number~~ of ~~installations~~“clean-up ~~over~~team” ~~the~~provider ~~period HS3 will need~~ to ~~train~~our ~~and deploy sufficient numbers of~~ service ~~teams to install 144~~offering. ~~locations~~Clean-up ~~per~~teams ~~week.~~are ~~Our~~responsible ~~company~~for ~~anticipates~~resolving ~~deploying~~technical 36and ~~three-man~~installation ~~teams to~~issues ~~reach~~left aunfinished ~~goal~~by ofother ~~144~~services ~~installations per week~~providers. InWe ~~this~~are ~~early~~very ~~stage~~comfortable ~~of the project~~becoming the ~~company~~“expert” ~~has~~and ~~deployed~~lead 8provider ~~three-man~~of ~~teams.~~choice ~~HS3~~to ~~technicians complete~~ the ~~two~~QSR. ~~day training~~It ~~and~~is ~~testing at a facility in~~ our ~~Denver~~ability ~~monitoring center. Between 10~~to ~~and~~acquire 16highly qualified ~~candidates~~individuals ~~participate~~and inallowing ~~each~~them ~~training~~to ~~session~~excel ~~with~~within our ~~approximately~~company’s ~~95%~~structure ~~qualifying~~that ascontinues ~~“Team~~to ~~members”.~~keep ~~Two~~our ~~additional~~company’s ~~staff~~in ~~will be required to supervise~~ the ~~field~~forefront ~~teams~~of providing exceptional service.

~~Our~~Insight ~~company~~estimates ~~has~~substantial locations ~~recently~~for the QSR will require Payment Card Industry Data Security Standards ~~increased~~compliant ~~services~~installation ~~offered~~and services to ~~the~~point ~~expanding~~of ~~self-~~sale ~~storage~~terminals ~~market.~~over ~~Teams~~the ~~trained~~next two toyears. ~~service~~To complete the ~~QSR~~estimated ~~market~~number ~~have~~of installations over the ~~ability~~period, toHS3 will ~~install~~need ~~systems~~to train and ~~provide~~ deploy sufficient numbers of four-man service teams to install ~~self-~~approximately ~~storage~~4 ~~customers~~locations per week. ~~Installing~~We ~~video~~currently ~~cables~~have ~~and~~five ~~cameras,~~four-man teams deployed. HS3 technicians complete the two day training and ~~providing~~ ~~video~~testing ~~analytics~~at ~~through~~a facility in our ~~remote~~Denver ~~video~~ monitoring center. Between 10 and ~~data~~16 ~~center~~qualified candidates ~~fill~~participate ain ~~need~~each ~~lacking~~training session with~~-in~~ ~~the~~approximately ~~self-~~95% ~~storage~~qualifying ~~industry~~as “Team members”. Two additional staff will be required to supervise the field teams .

Our company ~~anticipates~~has recently increased services offered to the expanding self- storage market. Teams trained ~~addition~~to ofservice ~~these~~the ~~two~~QSR market have the ability to install systems and provide service ~~markets~~to ~~will~~self- ~~substantially~~storage ~~improve~~customers. Installing video cables and cameras, and providing video analytics through our ~~outlook~~remote invideo monitoring and data center fill a need lacking with-in the ~~near~~self- ~~future~~storage industry.

On Our ~~April 27, 2011 our~~ company ~~entered~~ ~~into~~anticipates ~~a teaming agreement and employment agreement with Chester A. Gilliam and his company WizardWorks Security Systems Inc. (~~the ~~“Subcontractor”).~~addition ~~Under~~of ~~the~~these ~~agreement~~two ~~the~~service ~~Subcontractor~~markets will ~~provide~~substantially usimprove ~~with products and services set out in the agreement (the “Program”) and~~ our ~~company~~outlook ~~will compensate the Subcontractor for participation~~ in the ~~Program by providing a $360,000 bonus and~~near ~~the~~future. ~~concurrent issuance of 500,000 shares of our company’s common stock as follows:~~

~~The~~ On ~~$360~~April 27,~~000~~ ~~bonus~~2011 ~~will~~our becompany entered ~~divided~~ into ~~three~~a ~~annual~~teaming ~~installments~~agreement ~~equal~~and ~~to the~~employment ~~lesser~~agreement ofwith ~~$120,000~~Chester ~~per~~A. Gilliam ~~annum~~and orhis ~~50%~~company ~~of the revenue received from~~ WizardWorks ~~accounts~~Security ~~during~~Systems ~~that period~~Inc. ~~The Program bonus will be paid at~~ (the ~~end~~ ~~of each calendar quarter~~“Subcontractor”). Under Ifthe ~~during~~agreement ~~any quarter~~ the ~~total~~Subcontractor ~~revenue~~will ~~received from~~provide ~~WizardWorks~~us ~~accounts~~with isproducts ~~less~~and ~~than $60,000, the installment for that~~services ~~quarter~~set ~~will~~out bein ~~calculated~~the toagreement ~~minimally equal 50% of~~ (the ~~total~~“Program”) ~~revenues received~~and ~~from~~our ~~WizardWorks.~~company Ifwill ~~over~~compensate the Subcontractor ~~three~~for ~~year~~participation ~~term~~in the ~~amount~~Program ~~paid~~by ~~to WizardWorks~~providing isa ~~less than~~ $360,000 ~~this~~bonus ~~agreement will continue for one year~~and ~~increments until paid. Our company has~~ the ~~sole~~concurrent ~~right~~issuance toof ~~accelerate payments to reach the agreed $360~~500,000 atshares ~~any~~of ~~time~~our ~~during~~company’s ~~the~~common ~~term.~~stock as follows:

15The $360,000 bonus will be divided into three annual installments equal to the lesser of $120,000 per annum or 50% of the revenue received from WizardWorks accounts during that period. The Program bonus will be paid at the end of each calendar quarter. If during any quarter the total revenue received from WizardWorks accounts is less than $60,000, the installment for that quarter will be calculated to minimally equal 50% of the total revenues received from WizardWorks. If over the three year term the amount paid to WizardWorks is less than $360,000 this agreement will continue for one year increments until paid. Our company has the sole right to accelerate payments to reach the agreed $360,000 at any time during the term.
The issuance of 500,000 shares of our company’s common stock on execution of the Agreement;

In consideration for the above, our company will receive, record, and dispense all revenue from WizardWorks as of January 1, 2011 and may invoice customers under the WizardWorks name or our company’s name. At the completion of the bonus payments, our company has the right to assume the WizardWorks name and logo for $1.00. Our company will pay the Subcontractor $400 per month rent for the uses of the Subcontractor’s premises. Upon thirty day written notice we may vacate premises, remove all equipment and terminate the rental arrangement.

At16 ~~the completion of the bonus payments, our company has the right to assume the WizardWorks name and logo for $1.00.~~

~~Our~~ We ~~company~~have ~~will~~expanded ~~pay~~our ~~the~~market strategies ~~Subcontractor~~with ~~$400~~a ~~per~~diverse ~~month~~new ~~rent~~line ~~for~~of cutting edge products and services to meet the ~~uses~~growing needs of the ~~Subcontractor’s~~security ~~premises~~industry by providing a single source portal to our customers with products and services in combinations that complete the security and monitoring matrix. ~~Upon~~To ~~thirty~~meet ~~day~~the ~~written~~ever ~~notice~~changing needs of the industry, we ~~may~~have launched a combination of state-of-the art products and services that ~~vacate~~include ~~premises~~digital video recording technology (DVR), ~~remove~~video ~~all~~monitoring ~~equipment~~centers, biometric access control, personal biometric identification units, cellular and wireless ~~terminate~~mesh ~~the~~network ~~rental~~units ~~arrangement~~and wireless internet-linked satellite surveillance systems. This combination of products encompasses a total line that we believe will meet many customer security needs. Our monitoring center in Denver, Colorado serves as a single point security solutions portal, integrating our proprietary analytical software, network security, and video products.

WeOur ~~have~~company ~~expanded~~integrates technology, ~~our~~services ~~market strategies~~and ~~with~~people ainto ~~diverse~~solutions ~~new~~that ~~line~~enhance ofthe ~~cutting~~level ~~edge~~of security ~~products~~protection and surveillance services. toOur ~~meet the~~company’s ~~growing~~goal ~~needs~~is ofto ~~the~~become a security ~~industry by providing a single source~~ portal to, ~~our~~with ~~customers~~cutting-edge ~~with~~technology ~~products~~applications and ~~services~~solutions specifically intailored ~~combinations~~to ~~that~~meet ~~complete~~ the security ~~and~~needs ~~monitoring~~of ~~matrix~~various customers. ToAll ~~meet~~ of the ~~ever~~products ~~changing~~and ~~needs~~services, ofincluding ~~the~~biometric ~~industry~~access control, we ~~have~~satellite ~~launched~~remote monitoring, aand ~~combination~~DVRs ofare ~~state-of-the~~security ~~art~~related. ~~products~~Unlike ~~and~~many ~~services~~security companies that ~~include~~focus ~~digital~~exclusively ~~video~~on ~~recording~~security ~~technology~~hardware ~~(DVR)~~sales, ~~video~~our ~~monitoring~~company’s ~~centers, biometric~~value ~~access~~proposition ~~control,~~is to ~~personal~~offer ~~biometric~~proprietary ~~identification~~products ~~units,~~to ~~cellular~~generate ~~and wireless~~recurring ~~mesh~~revenue ~~network~~for ~~units~~our ~~and~~company ~~wireless internet-linked satellite surveillance~~in ~~systems.~~the ~~This~~form ~~combination~~ of ~~products~~monitoring ~~encompasses~~and aequipment ~~total~~licensing ~~line~~fees. ~~that~~We weview ~~believe~~the installation of ~~will~~our ~~meet~~hardware ~~many~~products ~~customer~~as ~~security~~the ~~needs.~~entry ~~Our~~vehicle ~~monitoring~~into ~~center~~a inlong-term ~~Denver,~~technological ~~Colorado~~relationship ~~serves~~with asour acustomers. ~~single~~We ~~point~~continually ~~security~~enhance ~~solutions~~our ~~portal,~~existing ~~integrating~~products ~~our~~by ~~proprietary~~periodically ~~analytical~~re-designing ~~software,~~them ~~network~~to ~~security,~~accommodate ~~and~~our ~~video~~customer ~~products~~needs.

~~Our~~We ~~company~~are ~~integrates technology,~~primarily ~~services~~an ~~and people into solutions that enhance the level of~~intellectual ~~security~~capital ~~protection and surveillance services~~company. Our company’s ~~goal~~both isdevelops toHS3’s ~~become~~proprietary ~~a security portal~~technology, ~~with cutting-edge technology applications~~ and ~~solutions~~ ~~specifically~~acquires ~~tailored to meet the security needs of various customers. All of the products~~ and ~~services,~~integrates ~~including~~appropriate ~~biometric~~industry ~~access~~technology ~~control,~~to ~~satellite~~provide ~~remote~~surveillance ~~monitoring,~~solutions ~~and~~customized ~~DVRs are security related. Unlike many security companies that focus exclusively on security hardware sales, our company’s value proposition is~~ to ~~offer proprietary products to generate recurring revenue for our company in~~ the ~~form~~requirements of ~~monitoring and equipment licensing fees. We view the installation of~~ our ~~hardware products as the entry vehicle into a long-term technological relationship with our~~ customers. WeOur ~~continually enhance our existing products by~~established ~~periodically~~mission ~~re-designing~~is ~~them~~ to ~~accommodate~~be: ~~our customer needs.~~

We“The ~~are~~trusted ~~primarily~~security anarchitect ~~intellectual capital~~providing ~~company. Our company both develops HS3’s proprietary technology, and~~vision ~~acquires~~when ~~and~~it ~~integrates appropriate industry technology to provide surveillance solutions customized to the requirements of our customers~~matters.” ~~Our established mission is to be:~~

~~“The~~ As ~~trusted~~a security architect, ~~providing~~we provide professional architectural, design and engineering to develop system solutions for our customers as desired by our customers. This concept is the foundation of our intellectual capital and core competencies. We use intellectual capital of our employees and the surveillance industry to architect and design solutions that provide customers vision and situational awareness. ~~when~~This itacquired ~~matters~~knowledge is transformed to innovations that are proprietary to our company.” This occurs in part, through:

As• aIncreased ~~security~~knowledge ~~architect,~~of ~~we provide~~new ~~professional architectural, design and engineering to develop system~~ solutions ~~for our customers as desired by our customers. This concept is the foundation of our intellectual capital~~ and ~~core competencies. We use intellectual capital of our employees and the surveillance~~ industry toadvancements ~~architect and~~• ~~design~~Developing ~~solutions~~new ~~that~~systems ~~provide~~• ~~customers~~Product ~~vision~~ and ~~situational~~application ~~awareness. This~~enhancements ~~acquired~~• ~~knowledge~~Applications isof ~~transformed~~new tocomponents ~~innovations~~• ~~that~~Designing ~~are~~new, proprietary ~~to our company. This occurs in part, through:~~software

~~Increased~~ We ~~knowledge~~have a sustainable competitive advantage in our ability to merge existing technology with the latest innovations in satellite broadband service, IP hardware, proprietary software, and access control security products. We have the expertise, capacity, staff, and ability to monitor sites located anywhere in the United States and Canada. Our Denver monitoring facility has access to 1.7 terabytes per second of ground-based ~~new~~internet ~~solutions~~capability for interfacing purposes. We developed the technologies, proved the concepts, and ~~industry~~started ~~advancements~~implementation, and market penetration. We have focused on the rural and farm animal/production market to date. The following are markets where our technology can excel in providing greater access, better performance and lower cost:

~~Developing~~• ~~new~~Producers ~~systems~~ of Animal Products • Homeland Security • Hospitality • Petroleum Industry • Educational Facilities • Construction Projects • Self-Storage Facilities

~~Product~~PRODUCERS ~~and~~OF ~~application~~ANIMAL ~~enhancements~~ PRODUCTS:

~~Applications~~ As the developer and architect of a ~~new~~video ~~components~~monitoring system (VMS) and surveillance program, we have refined the capabilities of our satellite video product and other surveillance technologies including their implementation. We also have the ability to provide service to remote areas underserved by high speed internet or cable providers.

~~Designing~~ Within ~~new~~a climate of increasing concerns over food safety, ~~proprietary~~security ~~software~~and animal welfare a tremendous market is evolving. We have developed surveillance products primarily video, to address these issues in the livestock production industry and to a lesser extent the food processing industry. Our solutions are developed to convey to consumers a sense of confidence in the quality of the food they eat, and that the producer has incorporated appropriate stewardship in animal production processes. For the producer this provides risk mitigation, enhanced production and value added branding.

WeThrough ~~have~~the acombined ~~sustainable~~use ~~competitive~~of ~~advantage~~proprietary ~~in our ability to merge existing~~ technology, ~~with~~including ~~the latest~~ innovations ~~in satellite broadband service~~, IPvideo ~~hardware~~analytics, ~~proprietary software,~~ and ~~access~~DVR’s ~~control security products. We have the expertise, capacity, staff,~~our ~~and~~company ~~ability to monitor sites located anywhere in the United States and Canada. Our Denver monitoring facility~~ has ~~access~~developed ~~to 1.7 terabytes per second~~ state-of ~~ground~~-~~based internet capability for interfacing purposes. We developed~~ the ~~technologies,~~-art ~~proved the concepts~~wireless, ~~and~~internet ~~started~~linked ~~implementation~~cellular, and ~~market~~ ~~penetration.~~satellite Welinked ~~have~~surveillance ~~focused on the rural and farm animal/production market to date~~systems. ~~There~~We are ~~six~~in ~~primary~~a ~~markets~~unique ~~where~~position ~~our~~to ~~technology~~be ~~can excel in providing~~the ~~greater~~first ~~access, better performance and lower cost:~~

1617

~~Producers~~company with national surveillance capabilities, to provide an independent third party monitoring verification system to the public that increases their level of ~~Animal~~confidence ~~Products~~in fundamentally important industries. Our surveillance and monitoring provides these assurances with a certified humane brand, whether acquired or created and generated in house.

~~Homeland~~ Animal ~~Security~~protein producers desire increased market share that hold margins while requiring value in programs they utilize. Our true measures of value can be assessed through increased profits and the realization of risk mitigation.

~~Hospitality~~ Our surveillance program allows:

~~Petroleum~~• ~~Industry~~ Producers to demonstrate stewardship with archived video. • Producers to employ HS3 as a third party independent verifier of video for the establishment and “certification” labeling of food products at the market shelf, i.e. the logo/brand assures consumer that the food they purchased for their family has been raised humanely and handled safely. • Producers to monitor animal behavior at remote locations and improve production efficiencies including herd disease awareness. • Management to assure employees work within standards required to maintain the highest levels of risk mitigation and animal stewardship. • Rebuttal to undercover video by animal activist groups.

~~Educational~~ Our ~~Facilities~~company‘s VMS and surveillance program provide the above criteria with a very low cost of entry that was modeled after a typical cable TV system. The equipment is provided to the producers who pay a monthly equipment license fee with requisite subscription fees for monitoring services. To further lower barriers of entry, our program removes the high front end equipment costs to the producers.

~~Construction~~ We ~~Projects~~intend to enter and penetrate into the animal welfare, protein and production business by contracting with various producers, associations, and/or companies that can use our surveillance services as a part of any value-added welfare/stewardship and production brand that they choose. As the architect of the surveillance system, we are able to provide specific elements (as designed and tailored by the producer/company) of our monitoring services to customers while maintaining ownership of the proprietary VMS system.

~~Self-Storage~~ Over ~~Facilities~~the prior years, we have determined proof of a market and penetration concept of the technology and also of our business model. Our strategy is to attain market penetration with HS3 as a vendor to associations/producers and/or companies desiring various certification programs. We are attempting to seize this initiative in the livestock arena because there is a significant opportunity to expand our service to meet the needs of additional protein producers in pork, beef, poultry, and dairy industries.

~~PRODUCERS~~HOMELAND ~~OF ANIMAL PRODUCTS~~SECURITY:

AsWe ~~the~~have ~~developer~~installed ~~and~~remote ~~architect of~~video aproducts ~~video~~for ~~monitoring~~the ~~system~~U.S. ~~(VMS)~~Coast ~~and surveillance program~~Guard, weenabling ~~have refined~~ the ~~capabilities~~ monitoring of ~~our satellite video product~~ and ~~other~~relaying ~~surveillance technologies~~of ~~including~~the ~~their~~physical ~~implementation.~~location Weof ~~also~~freight ~~have~~trains ~~the~~at ~~ability~~ports toof ~~provide~~entry. ~~service~~The toproduct relays ~~remote~~GPS ~~areas~~and ~~underserved~~live byvideo ~~high~~over ~~speed~~a ~~internet~~cellular ~~or cable providers~~network.

~~Within~~Our acovert ~~climate~~deployment system is one of ~~increasing~~the products developed that is technologically advanced. The covert ~~concerns~~deployment ~~over~~system ~~food~~allows ~~safety,~~the ~~security~~utilization ~~and~~of ~~animal~~cellular ~~welfare~~technology and provides a physically ~~tremendous~~small ~~market~~footprint ~~is evolving~~for loss prevention operations. WeThese ~~have~~systems ~~developed~~utilize SMS ~~surveillance~~messaging ~~products~~for ~~primarily~~alerting and motion detection or other triggers to activate video that records perpetrators on the enclosed drive, simultaneously sending attached photos to ~~address~~our secured portal. It is estimated there are 13,000 active ~~these~~train ~~issues~~locomotives currently in the ~~livestock~~United ~~production~~States ~~industry~~spread ~~and~~over to7 acompanies. Homeland ~~lesser~~Security ~~extent~~is concerned about the risk to the public should a locomotive ~~food~~and ~~processing~~its ~~industry.~~cargo ~~Our~~become ~~solutions~~hijacked ~~are~~or ~~developed~~compromised. toWe ~~convey~~have todeveloped ~~consumers~~and deployed a ~~sense~~biometric ofaccess ~~confidence~~control insystem ~~the~~which ~~quality~~limits ofaccess to the ~~food~~locomotive. ~~they eat~~In addition, we implemented GPS and ~~that~~video ~~the~~monitoring ~~producer~~transmitted in real-time over ~~has~~a ~~incorporated~~cellular ~~appropriate~~network ~~stewardship~~to ina ~~animal~~centralized ~~production~~monitoring ~~processes~~center. ~~For~~We ~~the~~have completed beta ~~producer~~testing ~~this~~on ~~provides~~28 ~~risk~~locomotives ~~mitigation,~~with ~~enhanced~~good ~~production~~results and ~~value added branding~~feedback.

~~Through~~HOSPITALITY: the combined use of proprietary technology, including innovations, video analytics, and DVR’s our company has developed state-of-the-art wireless, internet linked cellular, and satellite linked surveillance systems. We are in a unique position to be the first company with national surveillance capabilities, to provide an independent third party monitoring verification system to the public that increases their level of confidence in fundamentally important industries. Our surveillance and monitoring provides these assurances with a certified humane brand, whether acquired or created and generated in house.

~~Animal~~As ~~protein~~in ~~producers~~America’s ~~desire~~schools, security ~~increased~~for ~~market~~the ~~share~~hospitality ~~that~~industry ~~hold~~is ~~margins~~becoming ~~while~~increasingly ~~requiring~~important. ~~value~~Hotels inare trending ~~programs~~toward ~~they utilize.~~increasing ~~Our~~guest ~~true~~security measures as a result of ~~value~~injury ~~can~~and liability belitigation. ~~assessed~~Additionally ~~through~~hotel ~~increased~~operators ~~profits~~are becoming more concerned with improving general security for guests. Our internet protocol surveillance system enhances and augments the ~~realization~~hotel’s ofability ~~risk~~to ~~mitigation~~monitor the hotel’s perimeter and access to guest areas.

~~Our~~We ~~surveillance~~provide ~~program~~hotels a reliable ~~allows:~~source for web hosting. An ancillary advantage of our video monitoring system is the ability for the hotel to offer their video on web sites as an inexpensive, effective advertising tool.

~~Producers~~PETROLEUM toINDUSTRY: ~~demonstrate stewardship with archived video.~~

~~Producers~~ The topetroleum ~~employ~~industry ~~HS3~~spends millions asof adollars ~~third~~and ~~party~~man ~~independent~~hours ~~verifier~~monitoring ofoil ~~video~~and ~~for~~ gas wells throughout the country. ~~establishment~~Many oil and ~~“certification”~~gas ~~labeling~~wells ofare ~~food~~in ~~products~~remote atareas ~~the~~and, ~~market~~aside from typical ~~shelf~~maintenance and production monitoring, ithere is a constant threat of vandalism, sabotage and product theft.e. ~~the~~Today, ~~logo/brand~~all ~~assures~~monitoring ~~consumer~~of wells requires that ~~the~~an employee ~~food~~be ~~they~~physically ~~purchased~~present ~~for~~at a well to perform necessary inspections. We are working with industry leaders to eliminate this labor-intensive process. After installation of our petroleum surveillance package, customers can monitor their ~~family~~assets ~~has~~from ~~been~~anywhere ~~raised~~in ~~humanely~~the ~~and~~world ~~handled~~using ~~safely~~the internet. In addition, we have, and

~~Producers~~18 ~~to monitor animal behavior at remote locations and improve production efficiencies including herd disease awareness.~~

~~Management~~continue to ~~assure~~form ~~employees~~strategic ~~work~~alliances ~~within~~with ~~standards~~providers ~~required~~of complementary tomonitoring ~~maintain the~~products ~~highest~~that ~~levels~~mesh ofwith ~~risk~~our ~~mitigation~~satellite products and provide ~~animal~~well ~~stewardship~~operators with real-time information to enhance well production.

~~Rebuttal~~ We have researched, developed and installed a remote monitoring device called “OPIE” an Outdoor Portable Investigative Equipment surveillance vehicle. The device has been used to successfully ~~undercover~~monitor ~~video~~gas bywells ~~animal~~in ~~activist~~remote ~~groups~~Wyoming for three years. The original concept having been proven to the customer, an oil and gas producer, has expressed desire in purchasing additional OPIEs for their expansion to new fields.

~~Our~~EDUCATIONAL ~~company‘s~~FACILITIES: VMS and surveillance program provide the above criteria with a very low cost of entry that was modeled after a typical cable TV system. The equipment is provided to the producers who pay a monthly equipment license fee with requisite subscription fees for monitoring services. To further lower barriers of entry, our program removes the high front end equipment costs to the producers.

WeEven ~~intend~~in totoday’s ~~enter~~high-speed ~~and penetrate~~world, ~~into~~there ~~the~~are ~~animal~~numerous ~~welfare~~school districts, ~~protein~~rural and ~~production business by contracting with various producers~~urban, ~~associations,~~waiting ~~and/or~~for ~~companies that can use our surveillance~~high-speed ~~services~~internet asaccess ~~a part of any value-added welfare/stewardship~~ and ~~production~~video ~~brand that they choose~~monitoring. AsWe ~~the~~can ~~architect of the surveillance system, we are able to~~ provide ~~specific elements (as designed and tailored by~~ the ~~producer/company)~~ ~~of our monitoring~~ services torequired ~~customers while maintaining~~for ~~ownership~~maintaining ofand ~~the~~improving ~~proprietary VMS system~~security.

17 The federal government has mandated schools comply with the Homeland Security Act, which in part requires video surveillance. With our system installed, security information is available via the internet and our secured portal to individuals with the proper security clearance.

~~Over~~Providing ~~the~~schools ~~prior~~with ~~year, we have~~satellite ~~determined~~broadband ~~proof~~access ofto athe ~~market~~internet ~~and~~at ~~penetration~~megabytes-per-second ~~concept~~speeds, ofweb ~~the~~hosting services, ~~technology~~ and ~~also of~~the ~~our~~ability ~~business~~to ~~model.~~observe ~~Our~~activities ~~strategy~~in isand toaround ~~maintain~~the ~~market~~school ~~penetration~~ with ~~us as~~ adigital ~~vendor~~cameras tomake ~~associations/producers~~our ~~and/or~~company ~~companies~~a ~~desiring~~uniquely ~~various certification~~positioned ~~programs~~provider. WeOur ~~are attempting to seize this initiative in the~~advanced ~~livestock~~technology ~~arena~~and ~~because~~low ~~there~~cost isof aentry ~~significant~~structure ~~opportunity~~allows us to ~~expand~~offer ~~our service~~education tofacilities ~~meet~~products ~~the~~meeting ~~needs~~requirements of ~~additional~~Homeland ~~protein producers in pork, beef, poultry, and dairy industries~~Security.

~~HOMELAND~~CONSTRUCTION ~~SECURITY~~PROJECTS:

We ~~have~~are ~~installed~~working ~~(on~~with ~~a beta~~three ~~test)~~national construction companies to provide remote video ~~products~~security ~~for~~deploying the company’s UOPIE product.S. ~~Coast~~When ~~Guard~~installed, ~~enabling~~OPIE ~~the~~provides recurring revenue through live video monitoring of remote job sites. Captured video is transmitted to the Denver monitoring center for analytics and ~~relaying~~event ofclassification. Management is confident that the ~~physical~~increasing ~~location~~need offor ~~freight~~remote ~~trains~~security atwill ~~ports~~continue, ofand ~~entry~~open untapped markets for our proprietary cost effective solution. ~~The~~Uniquely ~~product~~positioned ~~relays~~our ~~GPS~~company ~~and~~feels ~~live~~the ~~video~~market ~~over~~for aour ~~cellular~~OPIE ~~network~~technology will continue to grow for years to come.

~~Our~~We ~~covert~~are ~~deployment~~continuing ~~system~~to ~~is one~~work ofwith ~~the~~a national ~~products~~livestock ~~developed~~trailer ~~that~~manufacturing iscompany ~~technologically~~to ~~advanced.~~provide ~~The~~its ~~covert~~proprietary ~~deployment~~video ~~system allows the utilization of cellular~~ technology ~~and~~in ~~provides~~trailers ~~a physically~~that ~~small~~monitor ~~footprint~~animal ~~for~~welfare ~~loss prevention operations. These systems utilize SMS messaging for alerting~~ and ~~motion~~handling ~~detection or other triggers to activate~~during ~~video~~transportation, ~~that records perpetrators on the enclosed drive~~loading, ~~simultaneously~~and ~~sending attached photos to our secured portal~~unloading. ItWe ~~is estimated there~~ are ~~13,000 active train locomotives currently~~ in the ~~United~~second ~~States~~year ~~spread~~of ~~over 7 companies.~~deploying ~~Homeland~~this ~~Security~~technology isand ~~concerned~~has ~~about~~reached ~~the risk to the public should~~ a ~~locomotive and~~threshold ~~its~~where ~~cargo~~it‘s ~~become~~ready ~~hijacked~~for orthis ~~compromised~~market. We have ~~developed~~the technology and ~~deployed~~capability ~~a biometric~~to ~~access~~provide ~~control~~the ~~system~~solution ~~which limits access~~ to the ~~locomotive. In~~livestock ~~addition~~industry, wesolving ~~implemented~~transportation ~~GPS and video~~ monitoring ~~transmitted in real-time over a cellular network to a centralized monitoring center~~requirements. ~~We have completed beta testing on 28 locomotives with good results and feedback and are awaiting customer feedback.~~

~~HOSPITALITY~~SELF-STORAGE FACILITIES:

AsOver inthe ~~America’s~~last ~~schools,~~30 ~~security for~~years the ~~hospitality~~self-storage industry ishas ~~becoming increasingly important. Hotels are~~typically ~~trending~~employed ~~toward~~part-time ~~increasing~~guard ~~guest~~services ~~security~~to ~~measures~~randomly ascheck atheir ~~result~~properties ofduring ~~injury and~~off ~~liability litigation~~hours. ~~Additionally~~We ~~hotel~~have ~~operators~~a ~~are~~solution ~~becoming~~that ~~more~~offers ~~concerned with~~continuous ~~improving~~surveillance ~~general~~utilizing ~~security for guests. Our internet protocol surveillance~~our ~~system~~company’s ~~enhances~~technology and ~~augments~~Denver ~~the~~monitoring ~~hotel’s~~center ~~ability~~ to ~~monitor~~provide ~~the hotel’s~~24/7/365 ~~perimeter~~monitoring, ~~and~~improving ~~access~~both tomonitoring ~~guest~~and ~~areas~~reduced costs.

WeRESULTS ~~provide~~OF ~~hotels~~OPERATIONS: ~~a reliable source for web hosting. An ancillary advantage of our video monitoring system is the ability for the hotel to offer their video on web sites as an inexpensive, effective advertising tool.~~

~~PETROLEUM~~Three ~~INDUSTRY:~~Months Ended September 30, 2011 and 2010

~~The~~Revenue ~~petroleum industry spends millions of dollars~~ and ~~man~~cost ~~hours monitoring oil and gas wells throughout the country. Many oil and gas wells are in remote areas and, aside from typical maintenance and production monitoring, there is a constant threat~~ of ~~vandalism, sabotage~~goods ~~and~~sold product theft. Today, all monitoring of wells requires that an employee be physically present at a well to perform necessary inspections. We are working with industry leaders to eliminate this labor-intensive process. After installation of our petroleum surveillance package, customers can monitor their assets from anywhere in the world using the internet. In addition, we have, and continue to form strategic alliances with providers of complementary monitoring products that mesh with our satellite products and provide well operators with real-time information to enhance well production.

We ~~have~~primarily ~~researched,~~derive ~~developed~~revenue ~~and~~from ~~installed~~our aoperations ~~remote~~by ~~monitoring~~(i) ~~device~~providing ~~called~~technical ~~“OPIE”~~installation anservices ~~Outdoor~~to ~~Portable~~the QSR ~~Investigative~~market ~~Equipment~~and ~~surveillance~~(ii) ~~vehicle.~~by ~~The~~charging ~~device~~monthly ~~has~~fees ~~been~~for ~~used~~providing tointegrated equipment, ~~successfully~~monitoring, ~~monitor~~hosting, ~~gas~~labor ~~wells~~and inother ~~remote~~technology ~~Wyoming~~services ~~for~~as ~~three~~well ~~years.~~as ~~The original~~equipment ~~concept~~sales ~~having~~to ~~been~~our ~~proven~~customers. toOur ~~the~~revenue ~~customer,~~and ancost ~~oil~~of ~~and~~goods ~~gas~~sold ~~producer,~~for ~~has~~the three month ~~expressed~~period ~~desire~~ended inSeptember ~~purchasing~~30, ~~additional~~2011 ~~OPIEs~~and ~~for~~2010 ~~their~~are ~~expansion~~outlined toin ~~new fields.~~the table below:

1819

EDUCATIONAL FACILITIES:

		Three months ended
		September 30,
		2011			2010
Contract Revenue:
Equipment license/monitoring fees	$	950		$	15,078
QSR		564,518			-
Revenue sharing from Teaming Agreement		9,999			-
Domain/business hosting fees		778			912
Other (discounts taken)		(13,253	)		-
		562,992			15,990

Other Revenue:
Equipment sales		39,121			668
IT Services		100			11,495
Other		-			(24	)
		39,221			12,139

Revenue		602,213			28,129

Cost of goods sold - Equipment		(26,140	)		(2,469	)
Cost of goods sold – QSR		(306,148	)		-
	$	269,925		$	25,660

~~Even~~ Contract inrevenues ~~today’s~~for ~~high-speed~~the ~~world~~quarter ended September 30, 2011 increased as compared to the comparative period in 2010 ~~there~~as ~~are~~we ~~numerous~~started ~~school~~to ~~districts~~focus on the quick serve restaurants (QSR) part of our business starting in December, ~~rural~~2010 and ~~urban~~the start effective January 1, ~~waiting~~2011 ~~for~~of ~~high-speed~~our ~~internet~~revenue ~~access~~sharing ~~and~~from ~~video~~our ~~monitoring~~teaming agreement. WeDuring ~~can provide~~ the ~~services~~quarter ~~required~~ended ~~for~~September ~~maintaining~~30, ~~and~~2011, ~~improving~~we ~~security~~serviced 154 quick service restaurant locations.

~~The federal government has mandated schools comply with the Homeland Security Act~~Selling, ~~which~~general ~~in part requires video surveillance. With our system installed, security information is available via the internet~~ and ~~our~~administrative ~~secured portal to individuals with the proper security clearance.~~ expenses

~~Providing~~Our ~~schools~~selling, ~~with~~general ~~satellite~~and ~~broadband~~administrative ~~access~~expenses tofor the ~~internet~~three atmonth ~~megabytes-per-second~~period ~~speeds,~~ended ~~web~~September ~~hosting services~~30, 2011 and 2010 ~~the~~are ~~ability~~outlined ~~to observe activities~~ in ~~and around~~ the ~~school~~table ~~with digital~~below: cameras make our company a uniquely positioned provider. Our advanced technology and low cost of entry structure allows us to offer education facilities products meeting requirements of Homeland Security.

~~CONSTRUCTION~~20 ~~PROJECTS:~~

HS3 is working with three national construction companies to provide remote video security deploying the company’s OPIE product. When installed, OPIE provides recurring revenue through live video monitoring of remote job sites. Captured video is transmitted to the Denver monitoring center for analytics and event classification. Management is confident that the increasing need for remote security will continue, and open untapped markets for our proprietary cost effective solution. Uniquely positioned our company feels the market for our OPIE technology will continue to grow for years to come.

		Three months ended
		September 30,
		2011			2010
Wages & employee benefits	$	122,188		$	27,116
Other contract labor/equipment		5,710			-
Board fees		12,500			-
Stock for services		-			-
Accounting, audit and tax expenses		8,000			11,250
Legal		4,646			925
Stock transfer/shareholder/proxy/filing fees		450			470
Professional fees/filings		3,430			-
Rent		1,200			-
Utilities		6,215			4,277
Computer network services		-			387
Computer server/internet fees		796			456
Advertising/domain registration		1,360			159
Telephone		1,437			5,384
Travel, meals and entertainment		1,402			2,891
Sales & marketing & R&D		-			1,117
Insurance		4,562			7,005
Postage/printing		343			343
Bank service charges		2,143			262
Office/computer supplies		2,701			1,026
Automobile expenses		3.022			996
Dues & subscriptions		-			55
Taxes/licenses & permits		-			4,368
Penalties & interest		373			407
Bad debt expense		-			-
Other misc. expenses/(income)		(940	)		(6,140	)
	$	181,538		$	$ 62,754

~~HS3~~Selling, isgeneral ~~continuing to work with a~~and ~~national~~administrative ~~livestock~~expenses ~~trailer~~increased ~~manufacturing~~during ~~company~~the tothree ~~provide~~month ~~its~~period ~~proprietary~~ended September ~~video~~30, ~~technology~~2011 inas ~~trailers~~compared ~~that~~to ~~monitor~~the ~~animal~~three ~~welfare~~month ~~and~~period ~~handling~~ended ~~during transportation,~~September ~~loading~~30, ~~and~~2010 ~~unloading. Our company is in the second year of~~due ~~deploying~~primarily ~~this~~to ~~technology~~higher wages and ~~has~~employee ~~reached~~benefits aas ~~threshold~~we ~~where~~restarted ~~it‘s~~paying ~~ready for this~~our ~~market.~~executive ~~HS3~~officers ~~has~~due ~~the technology and capability~~ to ~~provide~~ the ~~solution~~company’s tobetter ~~the livestock~~operating ~~industry, solving transportation monitoring requirements~~performance.

~~SELF-STORAGE~~Liquidity ~~FACILITIES:~~and Capital Resources

~~Over~~ Our ~~the~~primary ~~last~~liquidity 30needs ~~years~~are ~~the~~to fund ~~self-storage~~our ~~industry~~working ~~has~~capital ~~typically employed~~requirements ~~part-time~~and ~~guard~~future ~~services~~capital expenditures. Our ability to ~~randomly~~continue ~~check~~as ~~their~~a ~~properties~~going ~~during~~concern ~~off~~is dependent upon obtaining additional ~~hours.~~working ~~HS3~~capital ~~has~~to adevelop ~~solution~~our ~~that~~business ~~offers~~operations. ~~continuous~~We ~~surveillance~~intend ~~utilizing~~to ~~our~~use borrowings ~~company’s~~from ~~technology~~our ~~and~~revolving ~~Denver~~line ~~monitoring~~of ~~center~~credit, toequity ~~provide~~sales 24and /~~7/365 monitoring,~~ ~~improving~~or ~~both~~further ~~monitoring~~shareholder loans and ~~reduced~~advances ~~costs~~from related parties to mitigate the affects of our cash current position.

RESULTS OF OPERATIONS:

Working Capital							Percentage
		September 30,			June 30,		Increase/
		2011			2011		(Decrease)

Current Assets	$	454,530		$	427,013		6%
Current Liabilities		979,564			1,010,449		3%
Working Capital (deficit)	$	(525,034	)	$	(583,436	)	10%

Nine Months Ended March 31, 2011 and 2010

Cash Flows		Three months ended
		September 30,			September 30,
		2011			2010

Net cash (used in) operating activities	$	68,752		$	11,087
Net cash (used in) by investing activities		(3,469	)		(6,064	)
Net cash flow provided by (used in) financing activities		(70,270	)		(38,051	)
	$	(4,987	)	$	(33,028	)

~~Revenue~~21 ~~and cost of goods sold.~~

We Our ~~primarily~~cash ~~derive~~on ~~revenue~~hand ~~from~~at September ~~our~~30, ~~operations~~2011 bywas ~~(i)~~approximately ~~providing~~$8,000. ~~technical~~We ~~installation~~have ~~services~~made toa ~~the~~concentrated ~~QSR~~effort over the ~~market~~past ~~and~~year ~~(ii)~~to bycontinue ~~charging~~to ~~monthly~~reduce ~~fees~~our ~~for~~selling, ~~providing~~general ~~integrated~~and ~~equipment,~~administrative ~~monitoring~~expenses, ~~hosting,~~which ~~labor~~currently ~~and~~have ~~other~~a ~~technology~~cash ~~services~~burn asrate ~~well~~of asapproximately ~~equipment~~$60,000 per ~~sales~~month. toIn ~~our~~the ~~customers.~~future ~~Our~~we ~~revenue~~anticipate ~~and~~relying ~~cost~~on ofcash ~~goods~~flows ~~sold~~from ~~for~~operations ~~the~~and ~~three month~~our ~~period~~revolving ~~ended~~line ~~March~~of ~~31,~~credit ~~2011~~facility ~~and~~for ~~2010~~the ~~are~~purpose ~~outlined~~of inproceeding ~~the~~with ~~table~~our ~~below:~~plan of operations.

19 As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

		Three months ended
		March 31,
		2011			2010
Contract Revenue:
Equipment license/monitoring fees	$	2,850		$	16,558
QSR		530,709			-
Revenue sharing from Teaming Agreement		26,760
Domain/business hosting fees		925			3,156
Other (discounts taken)		(2,532	)		550
		558,712			20,264
Other Revenue:
Equipment sales		5,529			6,626
IT Services		3,545			10,010
Other		-			-
		9,074			16,636
Revenue		567,786			36,900
Cost of goods sold - Equipment		(3,022	)		(3,355	)
Cost of goods sold – QSR		(330,024	)		-
	$	234,740		$	33,545

Going Concern

~~During~~ Until ~~the~~year ~~quarter~~ ended ~~March 31~~June 30, 2011, ~~our~~we ~~technical~~have incurred ~~installation~~losses ~~services~~since toour ~~the~~inception. ~~QSR~~Because ~~market~~of ~~expanded~~these ashistorical losses, we ~~started~~ may torequire ~~handle~~additional ~~the~~working ~~demand~~capital ~~pursuant~~and tolong ~~our~~term ~~master~~capital ~~subcontract~~to ~~agreement~~develop ~~with~~our ~~Insight~~ business ~~Direct~~operations. ~~USA,~~We ~~Inc.~~intend ~~During~~to ~~the~~use ~~quarter~~borrowings ~~ended~~from ~~March~~our ~~31,~~revolving ~~2011~~line of credit facility, weequity ~~serviced~~sales and/or future shareholder loans and advances from ~~269~~ related ~~locations~~parties to mitigate the affects of our cash position.

~~Selling,~~ The ~~general~~continuation of our business is dependent upon us maintaining and ~~administrative~~achieving ~~expenses~~a break even or profitable level of operations. There are no assurances that we will be able to either (i) maintain a level of revenues adequate to break even and generate sufficient cash flow from operations; or (ii) obtain additional financing to support our working capital requirements. To the extent that funds generated from operations and debt financing are insufficient, we will have to raise additional capital through equity offerings. No assurance can be given that additional debt financing or equity infusion will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available, we may not be able to increase our operations.

~~Our~~ These ~~selling,~~conditions ~~general~~raise ~~and~~substantial ~~administrative~~doubt ~~expenses~~about ~~for~~our ~~the~~ability ~~three~~to ~~month~~continue ~~period~~as ~~ended~~a ~~March~~going ~~31,~~concern. ~~2011~~The ~~and~~financial ~~2010~~statements ~~are~~do ~~outlined~~not ininclude any adjustments relating to the ~~table~~recoverability ~~below:~~and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue as a going concern.

		Three months ended
		March 31, 2011
		2011		2010
Wages & employee benefits	$	76,801	$	36,548
Contract services		12,445		29,611
Board Fees		12,500		12,500
Accounting, audit and tax expenses		3,000		5,500
Legal		242		5,232
Stock transfer/shareholder/proxy/filing fees		55		2,591
Other professional fee/filings		608		-
Rent		1,200		6,859
Utilities		-		691
Computer network services		-		760
Computer server/internet fees		896		-
Advertising/domain registration		7		2,800
Telephone		2,568		20,194
Travel, meals and entertainment		1,750		1,503
Research & development		50		644
Insurance		7,467		7,693
Other expenses		4,980		3,555
	$	124,569	$	136,681

Critical Accounting Policies

20 Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

~~Selling,~~We ~~general~~base our assumptions and ~~administrative~~estimates ~~expenses~~on ~~decreased~~historical ~~during~~experience ~~the~~and ~~three~~other ~~month~~sources ~~period~~that ~~ended~~we ~~March~~believe ~~31,~~to be ~~2011~~reasonable toat ~~$124,569~~the astime. ~~compared~~Actual toresults ~~$136,681for~~may ~~the~~vary ~~three~~from ~~month~~our ~~period~~estimates ~~ended~~due ~~March~~to ~~31,~~changes ~~2010.~~in ~~This~~circumstances, ~~decrease~~weather, ispolitics, ~~due~~global ~~primarily~~economics, tomechanical problems, ~~lower~~general ~~telephone~~business ~~costs~~conditions and ~~contract~~other factors. Our significant ~~services,~~estimates ~~offset~~are byrelated ~~higher~~to ~~wages~~the ~~and~~valuation ~~employee~~of ~~benefits~~our stock issued for services, warrants and options.

~~Nine~~Basis ~~Months~~of ~~Ended~~presentation ~~March~~and ~~31,~~use ~~2011~~of ~~and~~estimates ~~2010~~

~~Revenue~~ The accompanying unaudited condensed consolidated financial statements in this quarterly report on Form 10-Q have been prepared pursuant to the rules and ~~Cost~~regulations of ~~goods~~the ~~sold~~Securities and Exchange Commission. Accordingly, these statements reflect adjustments (consisting only of normal recurring entries), which in our opinion, are necessary for a fair presentation of the financial results for the interim periods presented. Certain information and notes normally included in annual financial statements have been condensed in or omitted from these interim financial statements pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended June 30, 2011, together with our discussion and analysis of financial condition and results of operations, included in our Annual Report on Form 10-K filed on October 6, 2011 with Securities and Exchange Commission.

WeOur ~~primarily~~accounting ~~derive~~and ~~revenue from~~financial ~~our~~reporting ~~operations~~policies byconform ~~(i)~~to ~~providing~~accounting ~~technical~~principles ~~installation~~and ~~services~~practices ~~to the QSR~~generally ~~market~~accepted ~~and~~in ~~(ii)~~the byUnited ~~charging~~States ~~monthly~~of ~~fees~~America. ~~for~~The ~~providing~~accompanying ~~integrated equipment,~~consolidated ~~monitoring,~~financial ~~hosting,~~statements ~~labor~~include ~~and~~the ~~other~~accounts ~~technology~~of ~~services~~HS3 asand ~~well~~its ~~as equipment~~controlled ~~sales~~subsidiaries. toAll ~~our~~significant ~~customers.~~inter-company ~~Our~~accounts ~~revenue~~ and ~~cost~~transactions ofhave ~~goods~~been eliminated ~~sold~~in ~~for~~ the ~~nine~~preparation ~~month period~~of ~~ended~~the ~~March~~accompanying ~~31,~~condensed ~~2011~~consolidated financial ~~and~~statements. ~~2010 are outlined in the table below:~~

		Nine months ended
		March 31,
		2011			2010
Contract Revenue:
Equipment license/monitoring fees	$	23,122		$	45,467
QSR		534,388			-
Revenue sharing from Teaming Agreement		26,760			-
Domain/business hosting fees		2,756			6,804
Other (discounts taken)		(2,532	)		2,723
	$	584,494		$	54,994
Other Revenue:
Equipment sales	$	18,091		$	26,636
IT Services		20,146			19,146
	$	38,237		$	45,782
Revenue	$	622,731		$	100,776
Cost of goods sold - Equipment		(12,702	)		(17,333	)
Cost of goods sold – QSR		(330,024	)		-
	$	280,005		$	83,443

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. Our company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

~~Our~~22 revenues for the nine month period ended March 31, 2011 increased to $622,731 as compared to $100,776 for the nine month period ended March 31, 2010 as we have started to focus on the QSR part of our business. During the nine months ended March 31, 2011, we serviced 273 locations.

~~Selling,~~Loss ~~general~~Per ~~and~~Share ~~administrative expenses.~~

~~Our~~Basic ~~selling,~~and ~~general~~diluted ~~and~~earnings (loss) ~~administrative~~per ~~expenses~~share ~~for~~are computed using the ~~nine~~weighted ~~month~~average number of shares outstanding during the period. ~~ended~~Diluted ~~March~~earnings ~~31,~~per ~~2011~~share ~~and~~gives ~~2010~~effect to all potential diluted common shares outstanding during the period. In periods of net loss, there are ~~outlined~~no indiluted earnings per share since the ~~table~~result ~~below:~~would be anti-dilutive.

21Concentration of Credit Risk

		Nine months ended
		March 31,
		2011			2010
Wages & employee benefits	$	145,894		$	163,636
Contract services		19,005			112,687
Board Fees		37,500			37,500
Accounting, audit and tax expenses		28,500			28,000
Legal		1,728			17,439
Stock transfer/shareholder/proxy fees		1,520			7,709
Other professional fees/filings		2,102			-
Rent		982			17,600
Utilities		8,855			15,874
Computer network services		720			1,465
Computer server/internet fees		1,843			2,288
Advertising/domain registration		221			4,471
Telephone		11,467			47,224
Travel, meals and entertainment		5,855			8,152
Research & development		2,174			1,364
Insurance		19,074			17,385
Other expenses		(12,915	)		14,978
	$	274,525		$	497,772

We sell products to customers in diversified industries and geographical regions. We continually evaluate the creditworthiness of our customers. We evaluate the collectability of accounts receivable on a combination of factors. Our policies require us to write off or record specific reserve if we become aware of anything that would cause us to question a specific customer’s inability to meet their financial obligations to us. We will write off receivables when we believe an amount is not collectible. We have approximately $16,000 reserves for bad debt as of September 30, 2011.

~~Selling,~~Off-Balance ~~general~~Sheet ~~and administrative~~Arrangements expenses for the nine month period ended March 31, 2011 decreased by 45% as compared to the comparative period in 2010 primarily due to lower third party contract services expenses. Other expenses included $21,556 of bad debts written off, offset by approximately $45,000 gain on the settlement of our long term debt.

~~Liquidity~~ We ~~and~~have ~~Capital~~no ~~Resources~~off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Our primary liquidity needs are to fund our working capital requirements and future capital expenditures. Our ability to continue as a going concern is dependent upon obtaining additional working capital to develop our business operations. We intend to use borrowings and security sales to mitigate the effects of our cash position; however, due to current conditions in the debt and equity markets, no assurance can be given that debt and/or equity financing, if and when required, will be available.

Working Capital							Percentage
		March 31,			June 30,		Increase/
		2011			2010		(Decrease)
Current Assets	$	484,801		$	137,322
Current Liabilities		1,713,632			1,327,027
Working Capital (deficit)	$	(1,228,831	)	$	(1,189,705	)	(3.3%	)

Cash Flows		Nine months ended
		March 31,			March 31,
		2011			2010
Net cash (used in) operating activities	$	(229,217	)	$	(487,759	)
Net cash (used in) by investing activities		(9,777	)		(15,915	)
Net cash flow provided by (used in) financing activities		213,286			467,745
Increase (decrease) in cash and cash equivalents	$	(25,708	)	$	(35,929	)

Our cash on hand at March 31, 2011 was approximately $9,000. We have made a concentrated effort over the past year to continue to reduce our selling, general and administrative expenses, which had a cash burn rate of approximately $40,000 per month during the three months ended March 31, 2011. Over the long term we may require additional funds in order to hire additional contractors and book travel arrangements far enough in advance to utilize discount rates, to scale up to meet the demand of the master subcontract agreement with Insight. We anticipate relying on cash flows from operations, equity offerings, and debt financing for such expansion.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Going Concern

Our ability to continue as a going concern is dependent upon our obtaining additional working capital to develop business operations. We intend to use borrowings and equity sales to mitigate the effects of our cash position; however, no assurance can be given that debt or equity financing, if and when required, will be available.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Under~~We ~~the~~maintain ~~supervision~~disclosure controls and ~~with the~~procedures ~~participation~~that ofare designed ~~our~~to ~~management,~~ensure ~~including~~that ~~our~~information ~~principal~~required ~~executive~~to ~~officer, principal~~be ~~financial~~disclosed ~~officer~~in ~~and~~our ~~principal~~reports filed ~~accounting~~under ~~officer,~~the weSecurities ~~have~~Exchange ~~conducted an~~Act ~~evaluation~~ of ~~the~~1934, ~~effectiveness~~as ofamended, ~~the~~is ~~design~~recorded, processed, summarized and ~~operation~~reported ofwithin ~~our~~the ~~disclosure controls~~time ~~and~~periods ~~procedures,~~specified asin ~~defined under~~ the Securities and Exchange ~~Act~~Commission's ~~of 1934,~~rules asand ~~amended~~forms, asand ofthat ~~the~~such ~~end~~information is ofaccumulated ~~the~~and ~~period~~communicated ~~covered~~to byour ~~this~~management, ~~report.~~including ~~Based on~~our ~~this~~president ~~evaluation,~~ (our principal executive officer, principal financial officer and ~~principal~~ principle accounting officer) ~~concluded~~to asallow offor ~~March~~timely ~~31,~~decisions ~~2011~~regarding ~~that~~required ~~our~~ disclosure ~~controls and procedures were effective~~.

~~Changes~~As inof ~~Internal~~the ~~Controls~~end ~~Over~~of ~~Financial~~our quarter covered by this report, we carried ~~Reporting~~out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.

~~There~~Changes ~~have been no changes~~ in ~~our internal~~Internal ~~controls~~Control over ~~financial~~Financial ~~reporting that occurred during the quarter~~Reporting ~~ended March 31, 2011 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.~~

There have been no changes in our internal controls over financial reporting that occurred during our quarter ended September 30, 2011 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~None~~We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors.

Much of the information included in this report includes or is based upon estimates, projections or other “forward-looking statements”. Such forward-looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements. Such estimates, projections or other “forward-looking statements” involve various risks and uncertainties as outlined below. We caution readers of this report that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward-looking statements”. In evaluating us, our business and any investment in our business, readers should carefully consider the following factors.

Our new business operations will be subject to a number of risks and uncertainties, including those set forth below:

Risks Related To Our Business

We will require significant additional financing, the availability of which cannot be assured, and if we are unable to obtain such financing, our business may fail.

Our business plan calls for significant expenses necessary to continue the development of our business and expand our position in the market. There is no assurance that actual cash requirements will not exceed our estimates. We may need to raise additional funds to:

• support our planned growth; • develop or enhance new and existing security products; • increase our marketing efforts; • acquire complementary businesses, security products or technologies; and/or • respond to competitive pressures or unanticipated requirements.

~~develop~~We have not yet achieved sustainable positive cash flows. As such, we will depend to a large extent on outside capital over the near-term to fund our capital needs. Such outside capital may be obtained from additional debt and or ~~enhance~~equity ~~new~~financing. We do not currently have any arrangement for financing and ~~existing~~there ~~security~~is ~~products;~~no assurance that capital will be available to meet our operating costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would result in a dilution in the equity interests of our current shareholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to implement our business and growth strategies, respond to changing business or economic conditions, withstand adverse operating results, consummate desired acquisitions or compete effectively.

~~increase~~We operate in a highly-competitive industry and our ~~marketing~~failure to ~~efforts;~~compete effectively may adversely affect our ability to generate revenue.

~~acquire~~We ~~complementary~~are ~~businesses~~aware of similar security products and services which compete directly with our security products and services and some of the companies developing these security products and services have significantly greater financial, technical and marketing resources, larger distribution networks, and generate greater revenue and have greater name recognition than us. These companies may develop security products orsuperior ~~technologies;~~to those of our company. Such competition will potentially affect our chances of achieving profitability, and~~/or~~ ultimately adversely affect our ability to continue as a going concern.

~~respond~~Some of our competitors conduct more extensive promotional activities and offer lower prices to ~~competitive~~customers ~~pressures~~than we do, which could allow them to gain greater market share or ~~unanticipated~~prevent us from increasing our market share. In the future, we may need to decrease our prices if our competitors continue to lower their prices. Our competitors may be able to respond more quickly to new or changing opportunities, technologies and customer requirements.

We24 have not yet achieved sustainable positive cash flows. As such, we will depend to a large extent on outside capital over the near-term to fund our capital needs. Such outside capital may be obtained from additional debt and or equity financing. We do not currently have any arrangement for financing and there is no assurance that capital will be available to meet our operating costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would result in a dilution in the equity interests of our current shareholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to implement our business and growth strategies, respond to changing business or economic conditions, withstand adverse operating results, consummate desired acquisitions or compete effectively.

24To be successful, we must carry out our business plan, establish and strengthen our brand awareness through marketing, effectively differentiate our product line from those of our competitors and build our distribution network. To achieve this we may have to substantially increase marketing and research and development in order to compete effectively. Such competition will potentially affect our chances of achieving profitability, and ultimately adversely affect our ability to continue as a going concern.

WeRapid ~~operate~~technological changes in aour ~~highly-competitive~~ industry ~~and~~could ~~our~~render ~~failure~~our tosecurity ~~compete~~products ~~effectively~~or ~~may~~services ~~adversely~~non-competitive or obsolete and consequently affect our ability to generate ~~revenue~~revenues.

We ~~are~~will ~~aware~~derive all of ~~similar~~our revenues from the sale, licensing or leasing of our security products and services. ~~which~~Such security products and ~~compete~~services ~~directly~~are ~~with~~characterized ~~our~~and ~~security~~affected ~~products~~by rapid technological change, evolving industry standards and ~~services~~regulations and ~~some~~changing ofclient ~~the~~preferences. Our success ~~companies~~will ~~developing~~depend, ~~these~~in significant part, upon our ability to make timely and cost-effective enhancements and additions to our technology and to introduce new security products and services ~~have~~that ~~significantly~~meet customer demands. We expect new ~~greater~~security ~~financial,~~products ~~technical~~and services to be developed and ~~marketing~~introduced ~~resources,~~by ~~larger~~other ~~distribution~~companies ~~networks,~~that ~~and~~compete ~~generate~~with ~~greater~~our ~~revenue~~security products and ~~have~~services. ~~greater~~The ~~name~~proliferation ~~recognition~~of ~~than~~new ~~us.~~and ~~These~~established companies ~~may~~offering ~~develop~~similar security products ~~superior~~and toservices ~~those~~may reduce ofdemand for our ~~company~~ particular security products and services. ~~Such~~There ~~competition~~can be no assurance that we will ~~potentially~~be ~~affect~~successful ~~our~~in ~~chances~~responding ofto ~~achieving~~these or other ~~profitability~~technological changes, to evolving industry standards or regulations or to new security products and ~~ultimately~~services ~~adversely~~offered ~~affect~~by our ~~ability~~current and future competitors. In addition, we may not have access to ~~continue~~sufficient ascapital afor our research and ~~going~~development ~~concern~~needs in order to develop new security products and services.

~~Some~~We ofcould lose our ~~competitors~~competitive ~~conduct~~advantages ~~more~~if ~~extensive promotional activities and offer lower prices to customers than~~ we ~~do,~~are ~~which~~not ~~could allow~~able ~~them~~ to ~~gain~~protect ~~greater~~our ~~market~~proprietary ~~share~~technology orand ~~prevent~~intellectual usproperty ~~from~~rights ~~increasing our market~~against ~~share. In the future~~infringement, weand ~~may~~any ~~need~~related tolitigation ~~decrease~~could ~~our prices if our competitors continue to lower their prices. Our competitors may~~ be ~~able~~time-consuming ~~to respond more quickly to new or changing opportunities, technologies~~ and ~~customer requirements~~costly.

ToOur besuccess ~~successful,~~and weability ~~must~~to ~~carry~~compete ~~out~~depends ~~our~~in ~~business~~part ~~plan,~~on our ~~establish~~proprietary ~~and~~technology ~~strengthen~~incorporated in our ~~brand~~security ~~awareness~~products. ~~through~~If ~~marketing,~~any ~~effectively differentiate~~of our competitors ~~product~~copy ~~line~~or ~~from~~otherwise ~~those~~gain ofaccess to our ~~competitors~~proprietary ~~and~~technology ~~build our~~or ~~distribution~~develop ~~network.~~similar Totechnologies ~~achieve~~independently, ~~this~~ we ~~may~~would ~~have~~not be able to ~~substantially~~compete ~~increase~~as ~~marketing~~effectively. ~~and~~We ~~research~~consider ~~and~~our ~~development~~technologies ininvaluable ~~order~~ to ~~compete~~our ~~effectively.~~ability ~~Such~~to continue ~~competition~~to ~~will~~develop ~~potentially~~and ~~affect~~maintain the goodwill and recognition associated with our ~~chances~~brand. The ofmeasures ~~achieving~~we ~~profitability~~take to protect our technologies, and other intellectual ~~ultimately~~property ~~adversely~~rights, ~~affect~~which ~~our~~presently ~~ability~~are based upon registered trademarks in addition to ~~continue~~trade assecrets, amay ~~going~~not ~~concern~~be adequate to prevent their unauthorized use.

~~Rapid~~Although ~~technological~~we ~~changes~~rely, in part, on contractual provisions to protect our ~~industry~~trade secrets and proprietary know-how, there is no assurance that these agreements will not be breached, that we would have adequate remedies for any breach or that our trade secrets will not otherwise become known or be independently developed by competitors. Further, the laws of foreign countries may provide inadequate protection of intellectual property rights. We may need to bring legal claims to enforce or protect our intellectual property rights. Any litigation, whether successful or unsuccessful, could ~~render~~result in substantial costs and a diversion of corporate resources. In addition, notwithstanding any rights we have secured to our intellectual property, other persons may bring claims against us claiming that we have infringed on their intellectual property rights, including claims that our intellectual property rights are not valid. Adverse determinations in litigation in which we may become involved could subject us to significant liabilities to third parties, require us to grant licenses to or seek licenses from third parties and prevent us from manufacturing and selling our security products. Any claims against us, with or without ~~services~~merit, ~~non~~could be time-~~competitive~~consuming and costly to defend or ~~obsolete~~litigate, divert our attention and ~~consequently affect~~resources, result in the loss of goodwill associated with our trademarks ~~ability~~or require us to ~~generate~~make ~~revenues~~changes to our technologies. Furthermore, we cannot assure you that any pending patent application made by us will result in an issued patent, or that, if a patent is issued, it will provide meaningful protection against competitors or competitor technologies.

We ~~will~~may ~~derive~~not ~~all~~be ofable ~~our~~to ~~revenues~~hire ~~from~~and ~~the~~retain ~~sale,~~qualified ~~licensing~~personnel orto ~~leasing~~support of our ~~security~~growth ~~products~~ and ~~services.~~if ~~Such~~we ~~security products and services~~ are ~~characterized~~unable ~~and~~to ~~affected~~retain byor ~~rapid~~hire ~~technological~~such ~~change,~~personnel ~~evolving industry~~in ~~standards and regulations and changing client preferences. Our success~~the ~~will depend~~future, ~~in significant part, upon~~ our ability to ~~make~~improve ~~timely and cost-effective enhancements and additions to~~ our ~~technology and to introduce new~~ security products and services ~~that meet customer demands. We expect new security products~~ and ~~services to be developed and introduced by other companies~~implement ~~that compete with~~ our ~~security~~business ~~products~~objectives ~~and~~could ~~services. The proliferation of new and established companies offering similar security products and services may reduce demand for our particular security products and services. There can~~ be ~~no assurance~~adversely that we will be successful in responding to these or other technological changes, to evolving industry standards or regulations or to new security products and services offered by our current and future competitorseffected. ~~In addition, we may not have access to sufficient capital for our research and development needs in order to develop new security products and services.~~

WeTo ~~could~~continue ~~lose~~to ~~our~~grow, ~~competitive~~we ~~advantages~~will ifneed weto ~~are~~recruit ~~not~~additional ~~able~~senior tomanagement ~~protect~~personnel, ~~our~~including ~~proprietary~~persons ~~technology~~with financial and ~~intellectual~~sales ~~property~~experience. ~~rights against~~In ~~infringement~~addition, we must hire, train and ~~any~~retain ~~related~~a ~~litigation~~significant ~~could~~number beof ~~time-consuming~~other skilled personnel, including persons with experience in sales and ~~costly~~marketing. We have encountered competition for these personnel. We may not be able to find or retain qualified personnel, which may have a material adverse impact on our business.

~~Our~~We ~~success~~have ~~and~~a ~~ability~~history ~~to compete depends in part on our proprietary technology incorporated in our security products. If any~~ of ~~our competitors~~losses ~~copy~~and ornegative ~~otherwise~~cash ~~gain access to our proprietary technology or develop similar technologies independently~~flows, ~~we would not be able to compete as~~which ~~effectively.~~is Welikely ~~consider our technologies invaluable~~ to ~~our ability to~~ continue to ~~develop~~unless ~~and maintain the goodwill and recognition associated with~~ our ~~brand. The~~security ~~measures~~products wegain ~~take~~sufficient ~~to protect our technologies, and other intellectual~~market ~~property~~acceptance ~~rights, which presently are based upon registered trademarks in addition~~ to ~~trade~~generate ~~secrets,~~a ~~may~~commercially ~~not~~viable belevel ~~adequate~~of ~~to prevent their unauthorized use~~sales.

Although we ~~rely,~~anticipate ~~in part, on contractual provisions to protect our trade secrets and proprietary know-how, there is no assurance~~ that ~~these agreements~~we will ~~not~~ be ~~breached,~~able ~~that~~to westart ~~would have adequate remedies for any~~generating ~~breach~~increased orrevenues ~~that~~during ~~our trade secrets will not otherwise become known or be independently developed by competitors. Further,~~ the ~~laws~~next of12 ~~foreign countries may provide inadequate protection of intellectual property rights. We may need to bring legal claims to enforce or protect our intellectual property rights. Any litigation~~months, ~~whether~~we ~~successful~~also orexpect ~~unsuccessful,~~an ~~could~~increase ~~result~~ in ~~substantial~~ ~~costs~~development and aoperating ~~diversion of corporate resources~~costs. ~~In addition~~Consequently, ~~notwithstanding any rights~~ we ~~have~~expect ~~secured~~ to ~~our~~incur ~~intellectual property, other persons may bring~~operating ~~claims~~losses ~~against~~and usnet ~~claiming~~cash ~~that~~outflows weunless ~~have~~and ~~infringed~~until ~~on their intellectual property rights, including claims that~~ our ~~intellectual~~existing ~~property~~security ~~rights~~products ~~are not valid.~~and ~~Adverse determinations in litigation in which we may become involved could subject us to significant liabilities to third parties~~services, ~~require~~and ~~us to grant licenses to~~ or ~~seek~~any ~~licenses~~new ~~from third parties and prevent us from manufacturing and selling our~~ security products. ~~Any~~that ~~claims~~we ~~against~~may ~~us,~~develop ~~with~~ or ~~without~~ ~~merit~~acquire, ~~could be time-consuming and costly to defend or litigate, divert~~gain ~~our~~market ~~attention~~acceptance ~~and~~sufficient ~~resources, result in the loss of goodwill associated with our trademarks or require us~~ to ~~make~~generate ~~changes to our technologies. Furthermore, we cannot assure you that any pending patent application made by us will result in an issued patent, or that, if~~ a ~~patent~~commercially isviable ~~issued,~~and ~~it will provide meaningful~~sustainable ~~protection~~level ~~against~~of ~~competitors or competitor technologies~~sales.

We may ~~not~~ be ~~able~~dependent toupon ~~hire~~third ~~and~~party ~~retain~~manufacturers ~~qualified personnel~~ to ~~support~~produce our ~~growth~~security ~~and~~products. ifWe wecould ~~are~~be ~~unable~~adversely toaffected ~~retain~~by oran ~~hire~~increase ~~such~~in our ~~personnel~~manufacturers’ inservices ~~the future,~~or ~~our~~a ~~ability~~significant todecline ~~improve~~in our ~~security~~manufacturers’ financial ~~products~~condition. ~~and~~As ~~services~~a ~~and~~result, ~~implement~~ our business ~~objectives~~may ~~could~~fail beand ~~adversely~~investors ~~effected~~may lose their entire investment.

ToAs ~~continue~~a toquality ~~grow~~assurance and efficiency measure, we ~~will~~plan ~~need~~ to manufacture ~~recruit~~our ~~additional~~own ~~senior management~~security ~~personnel,~~products ~~including~~and ~~persons~~additionally ~~with~~contract ~~financial~~some manufacturing ~~and~~to ~~sales~~third ~~experience~~parties. InWe could be adversely affected by an increase in ~~addition,~~our wemanufacturer’s ~~must~~prices ~~hire,~~of ~~train~~manufacturing ~~and~~services ~~retain~~or a significant ~~number~~decline ofin our ~~other~~manufacturer’s ~~skilled personnel,~~financial ~~including~~condition. ~~persons~~If the relationships with ~~experience~~any inone ~~sales~~of our manufacturers is terminated and ~~marketing.~~we Weare ~~have encountered~~not ~~competition~~successful ~~for~~in ~~these~~establishing ~~personnel.~~a relationship Wewith ~~may~~an ~~not~~alternative bemanufacturer ~~able~~who tooffers ~~find~~similar orservices at ~~retain~~similar ~~qualified personnel~~prices, ~~which~~our ~~may~~results ~~have~~of aoperations ~~material~~could ~~adverse~~be ~~impact~~adversely onaffected, our business may fail and investors may lose their entire investment.

WeThe ~~have~~limitation ~~a history~~ of ~~losses~~any ~~and~~one ~~negative~~of ~~cash~~our ~~flows,~~manufacturers ~~which~~available ismanufacturing ~~likely~~capacity due to ~~continue~~significant ~~unless~~disruption ~~our~~in ~~security~~their ~~products~~manufacturing operation ~~gain~~could ~~sufficient~~have ~~market acceptance~~a tomaterial ~~generate~~adverse aeffect ~~commercially~~on ~~viable~~sales ~~level~~revenue and results of operations ~~sales~~and financial condition.

~~Although~~We wewill ~~anticipate~~be ~~that~~dependent weupon ~~will~~third beparty ~~able~~manufacturers to ~~start generating~~produce ~~increased~~some ~~revenues~~of ~~during~~our ~~the~~security ~~next~~products. 12If ~~months,~~production weat ~~also~~any ~~expect~~one anof ~~increase~~our inmanufacturers ~~development~~manufacturing ~~and~~plant ~~operating~~is ~~costs.~~disrupted ~~Consequently,~~for weany ~~expect~~number toof ~~incur~~reasons, ~~operating~~manufacturing yields ~~losses~~may ~~and~~be ~~net~~adversely ~~cash~~affected ~~outflows~~and ~~unless~~we ~~and~~may ~~until~~be ~~our~~unable ~~existing~~to ~~security~~meet ~~products~~our ~~and~~customer’s ~~services~~requirements. Consequently, ~~and~~our orcustomers ~~any~~may ~~new~~purchase security products ~~that~~from our wecompetitors. ~~may~~This ~~develop~~could orresult ~~acquire,~~in ~~gain market~~a ~~acceptance~~significant ~~sufficient~~loss of revenues and damage to ~~generate~~our acustomer ~~commercially~~relationships, ~~viable~~which ~~and~~could ~~sustainable~~materially adversely affect our ~~level~~business, results of ~~sales~~operations or financial condition.

WeUnless ~~may~~we becan ~~dependent~~establish ~~upon~~significant ~~third~~sales ~~party~~of ~~manufacturers to produce~~ our current security products. Weand ~~could be adversely affected by an increase in our manufacturers’~~ services ~~or a significant decline in our manufacturers’ financial condition. As a result~~, our ~~business~~potential ~~may~~revenues ~~fail and investors~~ may ~~lose their~~be ~~entire investment~~significantly limited.

AsWe expect that a ~~quality~~substantial ~~assurance~~portion, ~~and~~if ~~efficiency~~not ~~measure~~all, weof ~~plan~~our tofuture ~~manufacture~~revenue will be derived from the licensing of our ~~own~~security products and services. We expect that these security products and ~~additionally~~services ~~contract~~and ~~some~~their ~~manufacturing~~extensions toand ~~third~~derivatives ~~parties.~~will Weaccount ~~could~~for bea ~~adversely~~majority, ~~affected~~if bynot anall, ~~increase~~of in our revenue ~~manufacturer’s~~for ~~prices~~the offoreseeable ~~manufacturing~~future. ~~services~~The orsuccessful aintroduction ~~significant~~and ~~decline~~broad inmarket acceptance of our ~~manufacturer’s~~security ~~financial~~products ~~condition.~~- Ifas well as the ~~relationships~~development, ~~with~~introduction and ~~any~~market ~~one~~acceptance of ~~our~~any future enhancements - are, therefore, critical to ~~manufacturers~~our isfuture ~~terminated~~success and our ability to generate revenues. Unfortunately, there can be no assurance that we ~~are~~will ~~not~~be successful in ~~establishing~~marketing aour current product ~~relationship~~offerings, ~~with~~or anany ~~alternative~~new ~~manufacturer~~product ~~who~~offerings, ~~offers~~applications ~~similar~~or ~~services~~enhancements. atFailure ~~similar~~to ~~prices,~~achieve ~~our~~broad ~~results~~market acceptance of ~~operations~~our ~~could~~security beproducts, ~~adversely~~as ~~affected,~~a ~~our~~result of ~~business~~competition, ~~may~~technological ~~fail~~change, ~~and~~or ~~investors~~otherwise, ~~may~~would ~~lose~~significantly ~~their~~harm ~~entire investment~~our business.

~~The~~There ~~limitation~~is ofa ~~any~~high ~~one~~risk of ~~our~~business ~~manufactures~~failure ~~available manufacturing capacity~~ due to ~~significant~~the ~~disruption in their manufacturing~~fact ~~operation~~that ~~could~~we have anot ~~material~~commenced ~~adverse~~commercial ~~effect on sales revenue and results of~~ operations ~~and~~with ~~financial~~positive ~~condition.~~cash flow.

WeAlthough ~~will~~we beare ~~dependent~~in ~~upon~~the ~~third~~early ~~party~~stages ~~manufacturers~~of todeveloping ~~produce~~and ~~some~~implementing the commercialization of our security products. Ifand ~~production~~services, ~~at any one of our manufacturers~~there ~~manufacturing plant~~ is ~~disrupted~~no ~~for~~assurance ~~any~~that ~~number of reasons, manufacturing yields may be adversely affected and~~ we ~~may~~will be ~~unable~~able to ~~meet~~successfully ~~our~~develop ~~customer’s requirements.~~sales ~~Consequently,~~of our ~~customers may purchase~~ security products ~~from our~~and ~~competitors~~services. ~~This~~Thus ~~could~~we ~~result~~have inno away ~~significant loss~~ of ~~revenues~~evaluating ~~and~~whether ~~damage~~we will be able to ~~our~~operate ~~customer~~the ~~relationships~~business successfully, ~~which~~and ~~could~~there ~~materially~~is ~~adversely~~no ~~affect our~~assurance ~~business,~~that ~~results~~we ofwill ~~operations~~be orable ~~financial~~to ~~condition~~achieve profitable operations.

26Potential investors should be aware of the difficulties normally encountered in developing and commercializing new security products and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the commercialization process that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to development, manufacture and financing of our security products. If we are unsuccessful in addressing these risks, our business will most likely fail.

~~Unless~~If we ~~can~~fail ~~establish~~to ~~significant~~effectively ~~sales~~manage ofour growth our ~~current~~future ~~security~~business ~~products~~results ~~and~~could ~~services,~~be harmed and our ~~potential~~managerial ~~revenues~~and operational resources may be ~~significantly limited~~strained.

WeAs ~~expect~~we ~~that~~proceed awith ~~substantial portion, if not all, of our future revenue will be derived from~~ the ~~licensing~~commercialization of our security products and services., Wewe expect ~~that~~to ~~these~~experience ~~security~~significant ~~products~~ and ~~services~~rapid ~~and~~growth ~~their~~in ~~extensions~~the scope and ~~derivatives~~complexity ~~will~~of ~~account~~our ~~for~~business. aWe ~~majority,~~will ifneed ~~not~~to ~~all,~~add ofstaff ~~our~~to market ~~revenue~~our ~~for~~security ~~the~~services, ~~foreseeable~~manage ~~future.~~operations, ~~The~~handle ~~successful~~sales ~~introduction~~ and ~~broad~~marketing ~~market~~efforts and ~~acceptance~~perform offinance ~~our~~and ~~security~~accounting ~~products~~functions. -We aswill ~~well~~be asrequired ~~the~~to ~~development,~~hire ~~introduction~~a broad ~~and~~range ~~market acceptance~~ of ~~any~~additional ~~future~~personnel ~~enhancements~~in -order ~~are,~~to ~~therefore,~~successfully ~~critical~~advance to our ~~future~~operations. This ~~success~~growth ~~and~~is ~~our~~likely ~~ability~~ to ~~generate~~place ~~revenues.~~a ~~Unfortunately,~~strain ~~there can~~on beour nomanagement ~~assurance~~and ~~that~~operational resources. weThe ~~will~~failure beto ~~successful~~develop inand ~~marketing~~implement ~~our~~effective ~~current product offerings~~systems, or ~~any~~to ~~new~~hire and ~~product~~retain ~~offerings,~~sufficient ~~applications~~personnel orfor ~~enhancements.~~the ~~Failure~~performance of all of the functions necessary to ~~achieve~~effectively ~~broad~~service ~~market~~and ~~acceptance~~manage of our ~~security~~potential ~~products~~business, asor athe failure ~~result~~to ~~of competition,~~manage ~~technological~~growth ~~change~~effectively, orcould ~~otherwise,~~have ~~would~~a ~~significantly~~materially ~~harm~~adverse ~~our~~effect on our business and financial condition.

~~There~~Our issecurity aproducts ~~high~~and ~~risk~~services ofmay ~~business~~become ~~failure~~obsolete ~~due to the fact~~and ~~that~~unmarketable if we ~~have~~are ~~not~~unable ~~commenced~~to ~~commercial~~respond ~~operations~~adequately ~~with~~to ~~positive~~rapidly ~~cash~~changing ~~flow.~~technology and customer demands

~~Although~~Our weindustry ~~are~~is incharacterized ~~the~~by ~~early~~rapid ~~stages~~changes ofin ~~developing and~~technology ~~implementing~~and ~~the~~customer ~~commercialization~~demands. ofAs a result, our security products and services, ~~there~~may isquickly nobecome ~~assurance~~obsolete ~~that~~and weunmarketable. Our future success will bedepend ~~able~~on our ability to ~~successfully~~adapt ~~develop~~to ~~sales~~technological ofadvances, ~~our~~anticipate customer demands, develop new security products and services and enhance our current security products and services on a timely and cost-effective basis. ~~Thus~~Further, weour ~~have~~security noproducts and ~~way~~services must remain competitive with those of ~~evaluating~~other ~~whether~~companies wewith ~~will~~substantially begreater ~~able~~resources. toWe ~~operate~~may ~~the~~experience ~~business~~technical ~~successfully,~~or ~~and~~other difficulties ~~there~~that iscould nodelay ~~assurance~~or prevent the development, introduction or ~~that~~marketing weof ~~will~~new besecurity ~~able~~products toand ~~achieve~~services ~~profitable~~or ~~operations~~enhanced versions of existing security products and services. Also,

~~Potential~~26 investors should be aware of the difficulties normally encountered in developing and commercializing new security products and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the commercialization process that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to development, manufacture and financing of our security products. If we are unsuccessful in addressing these risks, our business will most likely fail.

If we ~~fail~~may not be able to ~~effectively~~adapt ~~manage~~new ~~our~~or ~~growth~~enhanced ~~our~~security ~~future~~products ~~business~~or ~~results~~services ~~could~~to beemerging ~~harmed~~industry standards, and our ~~managerial~~new ~~and~~security ~~operational~~products ~~resources~~or services may not be ~~strained~~favorably received.

AsDemand wefor ~~proceed with the commercialization of~~ our security products and services, wemight expect to experience significant and rapid growth in the scope and complexity of our business. We will need to add staff to market our security services, manage operations, handle sales and marketing efforts and perform finance and accounting functions. We will be ~~required to hire a broad~~ ~~range~~insufficient of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for ~~the~~us ~~performance of all of the functions necessary~~ to ~~effectively~~become ~~service and manage our potential business, or the failure to manage growth effectively, could have a materially adverse effect on our business and financial condition~~profitable.

~~Our~~We cannot predict with certainty the potential consumer demand for our security products ~~and~~or services ~~may~~or ~~become~~the ~~obsolete~~degree ~~and~~to which we will meet that ~~unmarketable~~demand. ifIf demand for our security products or services do not develop as expected and achieve consumer market acceptance, we ~~are~~might ~~unable~~not be able to generate ~~respond~~enough ~~adequately~~revenue to ~~rapidly~~become ~~changing~~profitable or to sustain our operations. We ~~technology~~plan to target the sale of our security products and services to four primary customer ~~demands~~groups; agricultural, commercial, government, and residential. We have based our strategy to target these consumers on a number of assumptions, some or all of which could prove to be incorrect. Even if markets for our service develop, we could achieve a smaller share of these markets than we currently anticipate.

~~Our~~Risks ~~industry~~Related isTo ~~characterized by rapid changes in technology and customer demands. As a result, our security products and services may quickly become obsolete and unmarketable.~~ Our ~~future~~Common ~~success~~Stock will depend on our ability to adapt to technological advances, anticipate customer demands, develop new security products and services and enhance our current security products and services on a timely and cost-effective basis. Further, our security products and services must remain competitive with those of other companies with substantially greater resources. We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new security products and services or enhanced versions of existing security products and services. Also, we may not be able to adapt new or enhanced security products or services to emerging industry standards, and our new security products or services may not be favorably received.

27A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.

~~Demand~~A ~~for~~prolonged decline in the price of our ~~security~~common ~~products~~stock could result in a reduction in the liquidity of our common stock and ~~services~~a ~~might~~reduction in our ability to raise capital. Because our operations have been financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our liquidity and our continued operations. Any ~~insufficient~~reduction ~~for~~in our ability to raise equity capital in the future would force us to reallocate ~~become~~funds ~~profitable~~from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to develop new products and continue our current operations. If the stock price declines, there can be no assurance that we can raise additional capital or generate funds from operations sufficient to meet our obligations. We believe the following factors could cause the market price of our common stock to continue to fluctuate widely and could cause our common stock to trade at a price below the price at which you purchase your shares of common stock:

We• ~~cannot~~actual ~~predict~~or ~~with~~anticipated ~~certainty~~variations ~~the~~in ~~potential consumer demand for~~ our ~~security~~quarterly ~~products~~operating orresults; ~~services~~• orannouncements ~~the~~of ~~degree~~new toservices, ~~which~~products, weacquisitions ~~will~~or ~~meet~~strategic ~~that demand.~~relationships Ifby ~~demand~~us ~~for~~or our ~~security~~competitors; ~~products~~• orchanges ~~services~~in doaccounting ~~not~~treatments ~~develop as expected and achieve consumer market acceptance, we might not be able to generate enough revenue to become profitable~~ or toprinciples; ~~sustain~~• ~~our~~changes ~~operations.~~in ~~We plan~~earnings toestimates ~~target~~by ~~the~~securities ~~sale~~analysts ~~of our security products~~ and ~~services~~in toanalyst ~~four primary customer groups~~recommendations; ~~agricultural, commercial, government,~~ and ~~residential.~~• Wegeneral ~~have based our strategy to target these consumers on a number of assumptions~~political, ~~some or all of which could prove to be incorrect. Even if markets for our service develop~~economic, weregulatory ~~could~~and ~~achieve~~market ~~a smaller share of these markets than we currently anticipate~~conditions.

~~Risks~~The ~~Related~~market Toprice ~~Our~~for ~~Common~~our ~~Stock~~common stock may also be affected by our ability to meet or exceed expectations of analysts or investors. Any failure to meet these expectations, even if minor, could materially adversely affect the market price of our common stock.

AIf ~~decline~~we inissue ~~the~~additional ~~price~~shares of ~~our~~ common stock ~~could~~in ~~affect~~the ~~our~~future, ~~ability~~it towill ~~raise~~result ~~further~~in ~~working~~the ~~capital~~dilution ~~and~~of ~~adversely~~our ~~impact~~existing ~~our operations.~~shareholders

ASubsequent ~~prolonged~~to ~~decline~~shareholder inapproval ~~the~~at ~~price of~~ our ~~common~~November ~~stock~~4, ~~could~~2009 ~~result~~annual inmeeting, aour ~~reduction~~certificate inof incorporation authorizes the ~~liquidity~~issuance of 200,000,000 ~~our~~shares of common stock. ~~and~~Our aboard ~~reduction~~of ~~in our~~directors ~~ability~~has tothe ~~raise~~authority ~~capital.~~to issue ~~Because~~additional ~~our~~shares ~~operations~~of ~~have~~common ~~been~~stock ~~financed~~up ~~through~~ to the ~~sale~~authorized ofcapital ~~equity~~stated ~~securities,~~in the acertificate ~~decline~~of inincorporation. ~~the~~Our ~~price~~board of ~~our~~directors ~~common~~may ~~stock~~choose ~~could~~to issue besome ~~especially~~or ~~detrimental~~all toof ~~our~~such ~~liquidity~~shares ~~and~~of ~~our~~common ~~continued~~stock ~~operations.~~to ~~Any reduction~~acquire inone ~~our~~or ~~ability~~more businesses or to ~~raise~~provide ~~equity~~additional ~~capital~~financing in the future. ~~would~~The ~~force~~issuance usof ~~to reallocate~~any ~~funds~~such ~~from~~shares of ~~other~~common ~~planned~~stock ~~uses~~will ~~and~~result ~~would~~in ~~have~~ a ~~significant~~reduction ~~negative effect~~of onthe ~~our~~book ~~business~~value ~~plans~~or ~~and~~market ~~operations,~~price ~~including our ability to develop~~of ~~new~~the ~~products~~outstanding ~~and~~shares ~~continue~~of our ~~current~~common ~~operations~~stock. If ~~the~~we ~~stock~~do ~~price~~issue ~~declines, there~~any ~~can~~such ~~be no assurance that we can raise~~ additional shares ~~capital~~of orcommon ~~generate~~stock, ~~funds from~~such ~~operations~~issuance ~~sufficient~~also towill ~~meet~~cause ~~our~~a ~~obligations.~~reduction Wein ~~believe~~ the ~~following~~ ~~factors~~proportionate ~~could~~ownership ~~cause~~and ~~the~~voting ~~market~~power ~~price~~ of ~~our~~all ~~common~~other ~~stock~~shareholders. toFurther, ~~continue to~~any ~~fluctuate~~such ~~widely~~issuance ~~and~~may ~~could~~result ~~cause~~in ~~our common stock to trade at~~ a ~~price~~change ~~below~~of ~~the price~~control ~~at which you purchase your shares~~ of ~~common~~our ~~stock:~~corporation.

~~actual~~If ora ~~anticipated~~market ~~variations~~for in our ~~quarterly~~shares ~~operating~~of ~~results;~~common stock does not develop, shareholders may be unable to sell their shares of common stock.

~~announcements~~There ofis ~~new~~currently ~~services,~~a ~~products~~limited market for our common stock, ~~acquisitions~~which trades orthrough ~~strategic~~the Over-the-Counter Bulletin Board quotation system. Trading of ~~relationships~~stock bythrough usthe orOver-the-Counter ~~our~~Bulletin ~~competitors;~~Board is frequently thin and highly volatile. There is no assurance that a sufficient market will develop in the stock, in which case it could be difficult for shareholders to sell their stock

~~changes~~Trading inof ~~accounting~~our ~~treatments~~stock ormay ~~principles;~~be restricted by the Securities and Exchange Commission’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock .

~~changes~~27 ~~in earnings estimates by securities analysts and in analyst recommendations; and~~

~~general~~The ~~political~~Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, ~~economic~~subject to certain exceptions. Our securities are covered by the penny stock rules, ~~regulatory~~which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. ~~conditions~~The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.

The ~~market~~Financial ~~price~~Industry ~~for~~Regulatory ~~our~~Authority, ~~common stock may also be affected by our ability to meet~~ or ~~exceed~~FINRA, ~~expectations of analysts or investors. Any failure~~has toadopted ~~meet~~sales ~~these~~practice ~~expectations~~requirements, ~~even~~which ifmay ~~minor,~~limit ~~could~~a ~~materially~~stockholder’s ~~adversely~~ability ~~affect the~~to ~~market~~buy ~~price~~and ofsell our shares of common stock.

IfIn weaddition ~~issue~~to ~~additional~~the ~~shares~~“penny ofstock” ~~common~~rules ~~stock~~described above, the FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment ~~future~~is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must itmake ~~will~~reasonable ~~result~~efforts into obtain information about the ~~dilution~~customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our ~~existing~~common ~~shareholders~~stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

~~Subsequent~~Other toRisks shareholder approval at our November 4, 2009 annual meeting, our certificate of incorporation authorizes the issuance of 200,000,000 shares of common stock. Our board of directors has the authority to issue additional shares of common stock up to the authorized capital stated in the certificate of incorporation. Our board of directors may choose to issue some or all of such shares of common stock to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares of common stock will result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares of common stock, such issuance also will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change of control of our corporation.

~~If a market for our shares of common stock does not develop~~Trends, ~~shareholders~~ ~~may~~Risks beand ~~unable to sell their shares of common stock~~Uncertainties.

~~There~~We ishave ~~currently~~sought ato ~~limited~~identify ~~market~~what ~~for~~we ~~our~~believe ~~common~~to ~~stock,~~be ~~which~~the most ~~trades~~significant ~~through~~risks ~~the~~to ~~Over-the-Counter~~our ~~Bulletin~~business, ~~Board~~but ~~quotation~~we ~~system.~~cannot ~~Trading~~predict ofwhether, or to what ~~stock~~extent, ~~through~~any ~~the~~such ~~Over-the-Counter~~risks ~~Bulletin~~may ~~Board~~be isrealized ~~frequently~~nor ~~thin~~can ~~and~~we ~~highly volatile.~~guarantee ~~There~~that iswe nohave identified ~~assurance~~all ~~that~~possible arisks ~~sufficient~~that ~~market~~might ~~will~~arise. ~~develop~~Investors inshould ~~the~~carefully ~~stock,~~consider inall ~~which~~of ~~case~~the itrisk ~~could~~factors bebefore ~~difficult~~making ~~for~~an ~~shareholders~~investment decision with respect to ~~sell~~our ~~their~~common stock.

28We may be unable to continue as a going concern in which case our securities will have little or no value.

~~Trading~~Our ofindependent auditors have noted in their report concerning our ~~stock~~financial ~~may~~statements beas ~~restricted~~of byJune ~~the~~30, ~~Securities~~2011 ~~and Exchange~~that ~~Commission’s~~we ~~penny~~have ~~stock~~incurred ~~regulations~~substantial losses since inception, which ~~may~~raises ~~limit~~substantial adoubt ~~stockholder’s~~ about our ability to continue ~~buy~~as ~~and~~a ~~sell~~going concern. In the event we are not able to continue operations you will likely suffer a complete loss of your investment in our ~~stock~~securities.

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our ~~securities are covered by the penny stock rules, which impose additional sales practice requirements on broker~~By-~~dealers~~laws ~~who~~contain ~~sell~~provisions toindemnifying ~~persons~~our ~~other~~officers ~~than established customers~~ and ~~“accredited~~directors ~~investors”.~~against ~~The~~all ~~term “accredited investor” refers generally to institutions with assets in excess of $5~~costs,~~000,000~~ orcharges ~~individuals~~and ~~with~~expenses aincurred net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by ~~the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market~~them. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.

~~The~~Our ~~Financial~~By-laws ~~Industry~~contain ~~Regulatory~~provisions ~~Authority~~with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or ~~FINRA~~satisfy a judgment, actually ~~has~~and reasonably incurred by him, including an amount paid to settle an ~~adopted~~action ~~sales~~or ~~practice~~satisfy ~~requirements~~a judgment in a civil, criminal or administrative action or proceeding to which ~~may~~he ~~limit~~is made a ~~stockholder’s~~party ~~ability~~by ~~to buy~~reason ~~and~~of ~~sell~~his ~~our~~being ~~shares~~or having been one of ~~common~~our ~~stock~~directors or officers.

In28 addition to the “penny stock” rules described above, the FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Other Risks

Trends, Risks and Uncertainties.

We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of the risk factors before making an investment decision with respect to our common stock.

We may be unable to continue as a going concern in which case our securities will have little or no value.

Our independent auditors have noted in their report concerning our financial statements as of June 30, 2010 that we have incurred substantial losses since inception, which raises substantial doubt about our ability to continue as a going concern. In the event we are not able to continue operations you will likely suffer a complete loss of your investment in our securities.

Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

Our By-laws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officers.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None.

Item 4. [Removed and Reserved]

Item 5. Other Information

None.

Item 6. Exhibits

Exhibits required by Item 601 of Regulation S-K

Exhibit	Description
Number

(3)	Articles of Incorporation and Bylaws

3.1	Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2 filed on August 2, 2004).

3.2	By-laws (incorporated by reference from our Registration Statement on Form SB-2 filed on August 2, 2004).

3.3	Certificate of Change filed with the Nevada Secretary of State on December 1, 2009 and filed on Form 10-Q on February 12, 2010.

(4)	Instruments Defining the Rights of Security Holders, Including Indentures

4.1	2005 Stock Option Plan of HS3 Technologies, Inc. (incorporated by reference from our Current Report on Form 8-K filed on November 10, 2005).

(10)	Material Contracts

10.1	Share Purchase Agreement dated March 5, 2005 among Zeno Inc., Linda Smith, Acropolis Investment Holdings, LLC and Gregory S. Yanke Law Corporation (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2005).

10.2	Asset Purchase Agreement dated August 31, 2005, between Zeno Inc. and IP-Colo, Inc. (incorporated by reference from our Current Report on Form 8-K filed on September 16, 2005).

10.3	Surveillance Installment and Training Agreement dated December 20, 2005 (incorporated by reference from our Current Report on Form 8-K filed December 23, 2005).

10.4	Partnership Agreement with Wright-Hennepin Cooperative Electric Association (incorporated by reference from our Current Report on Form 8-K filed on June 11, 2007).

10.5	Distribution Agreement with Autostar Technology Private Limited (incorporated by reference from our Current Report on Form 8-K filed on April 4, 2007).

10.6	Warrant Purchase Agreement dated November 6, 2007 (incorporated by reference from our Current Report on Form 8-K filed on November 20, 2007).

10.7	Agreement with the American Humane Association (incorporated by reference from our Current Report on Form 8-K filed on August 14, 2008)

10.8	Master Subcontract Agreement effective December 10, 2010 with Insight Direct USA, Inc. (incorporated by reference from our Current Report on Form 8-K filed April 28, 2011).

10.9	Teaming Agreement and Employment Agreement dated February 1, 2011 with Chester Gilliam (incorporated by reference from our Current Report on Form 8-K filed April 28, 2011).

(21)	Subsidiaries of the Registrant

21.1	ip-Colo, Inc.

(31)	Rule 13a-14(a)/15d-14(a) Certifications

31.1*	Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer.

(32)	Section 1350 Certifications

32.1*	Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer.

Exhibit	Description
Number
(3)	Articles of Incorporation and Bylaws
3.1	Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2 filed on August 2, 2004).
3.2	By-laws (incorporated by reference from our Registration Statement on Form SB-2 filed on August 2, 2004).
3.3	Certificate of Change filed with the Nevada Secretary of State on December 1, 2009 and filed on Form 10-Q on February 12, 2010.
(4)	Instruments Defining the Rights of Security Holders, Including Indentures
4.1	2005 Stock Option Plan of HS3 Technologies, Inc. (incorporated by reference from our Current Report on Form 8-K filed on November 10, 2005).
(10)	Material Contracts
10.1	Share Purchase Agreement dated March 5, 2005 among Zeno Inc., Linda Smith, Acropolis Investment Holdings, LLC and Gregory S. Yanke Law Corporation (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2005).
10.2	Asset Purchase Agreement dated August 31, 2005, between Zeno Inc. and IP-Colo, Inc. (incorporated by reference from our Current Report on Form 8-K filed on September 16, 2005).
10.3	Surveillance Installment and Training Agreement dated December 20, 2005 (incorporated by reference from our Current Report on Form 8-K filed December 23, 2005).

Exhibit	Description
Number
10.4	Partnership Agreement with Wright-Hennepin Cooperative Electric Association (incorporated by reference from our Current Report on Form 8-K filed on June 11, 2007).
10.5	Distribution Agreement with Autostar Technology Private Limited (incorporated by reference from our Current Report on Form 8-K filed on April 4, 2007).
10.6	Warrant Purchase Agreement dated November 6, 2007 (incorporated by reference from our Current Report on Form 8-K filed on November 20, 2007).
10.7	Agreement with the American Humane Association (incorporated by reference from our Current Report on Form 8-K filed on August 14, 2008)
10.16	Master Subcontract Agreement effective December 10, 2010 with Insight Direct USA, Inc. (incorporated by reference from our Current Report on Form 8-K filed April 28, 2011)
10.17	Teaming Agreement and Employment Agreement dated February 1, 2011 with Chester Gilliam (incorporated by reference from our Current Report on Form 8-K filed April 28, 2011).
(14)	Code of Ethics
14.1	Code of Ethics and Business Conduct (incorporated by reference from our Annual Report on Form 10-KSB filed on October 10, 2007).
21	Subsidiaries of the Registrant
21.1	Ip-Colo, Inc.
31	Section 302 Certifications
31.1	Section 302 Certification (filed herewith).
(32)	Section 906 Certification
32.1	Section 906 Certification (filed herewith).

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.

	HS3 TECHNOLOGIES, INC.
	(Registrant)
Dated: May 16, 2011	/s/ Mark Lana
Dated: November 14, 2011	/s/ Mark Lana
	Mark Lana
	Chief Executive Officer and Director
	(Principal Executive Officer, Principal Financial
	Officer and Principal Accounting Officer)

3231

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