10-Q

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

Form 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File Number: 000-49746

VISCOUNT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Nevada	88-0498181
(State or other jurisdiction of	(I.R.S. Employer I.D. No.)
incorporation or organization)

4585 Tillicum Street, Burnaby, British Columbia, Canada V5J 5K9
(Address of principal executive offices)

(604) 327-9446
Registrant’s telephone number

_________________________________________________________________
Former name, former address, and former fiscal year, if changed since last report

Check whether the registrant (1) filed all reports required to be filed by sections 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check 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 [X] No [ ]

Check whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filed [ ] Smaller reporting company [X]

Check whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act. Yes [ ] No [X]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of March 31, 2009 the registrant’s outstanding common stock consisted of 17,841,250 shares.

PART I. FINANCIAL INFORMATION

Safe Harbor Statement

Certain statements in this filing that relate to financial results, projections, future plans, events, or performance are forward-looking statements and involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Terms such as “we believe”, “we expect” or “we project”, and similar terms, are examples of forward looking statements that we may use in this report. Such statements also relate to the sales trends of our Enterphone 2000, EPX, previously named Enterphone 3000, and MESH product lines, general revenues, income, the number of new construction projects or building upgrades that may generate sales of our product, and in general the market for our products. Any projections herein are based solely on management’s views, and were not prepared in accordance with any accounting guidelines applicable to projections. Accordingly, these forward looking statements are intended to provide the reader with insight into management’s proposals, expectations, strategies and general outlook for our business and products, but because of the risks associated with those statements, including those described herein and in our annual report, readers should not rely upon those statements in making an investment decision. The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and the Company assumes no obligation to update such forward-looking statements.

The following discusses our financial condition and results of operations based upon our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States of America. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein. Unless otherwise noted as USD or U.S. dollars, all dollar references herein are in Canadian dollars. As at March 31, 2009, the foreign exchange rate certified by the Federal Reserve Bank of New York was CAD$1.2613 for USD$1.0000 or CAD$1.0000 for USD$0. 7929.

Item 1. Financial Statements

2

VISCOUNT SYSTEMS, INC.

CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)

MARCH 31, 2009

F-1

VISCOUNT SYSTEMS, INC.

Interim Condensed Consolidated Balance Sheets

(Expressed in Canadian dollars)

		March 31,			December 31,
		2009			2008
		(Unaudited)			(Audited)
Assets
Current assets
Cash	$	266,561		$	255,172
Trade accounts receivable, less allowance for doubtful accounts
of $311,168 (2008 - $336,776)		518,444			584,517
Inventory (note 2)		445,139			556,572
Prepaid expenses		5,891			10,528
Lease receivable		660			961
Total current assets		1,236,695			1,407,750
Equipment (note 3)		49,041			60,501
Intangible assets (note 4)		125,353			130,576
Total assets	$	1,411,089		$	1,598,827
Liablilities and stockholders' equity
Current liabilities
Bank indebtedness (note 5)	$	36,864		$	57,775
Accounts payable and accrued liabilities		467,696			575,257
Deferred revenue		22,167			31,280
Due to stockholders (note 6)		392,402			392,402
Notes payable (note 7)		20,000			50,000
Total current liabilities		939,129			1,106,714
Commitments and contingencies (note 10)
Stockholders' equity
Capital stock (note 8)
Authorized:
100,000,000 common shares with a par value of US$0.001 per share
20,000,000 preferred shares with a par value of US$0.001 per share
Issued and outstanding:
17,841,250 commons shares (2008 - 17,841,250)		25,434			25,434
Additional paid-in capital		2,353,030			2,353,030
Accumulated deficit		(1,906,504	)		(1,886,351	)
Total stockholders' equity		471,960			492,113
Total liabilities and stockholders' equity	$	1,411,089		$	1,598,827

See accompanying notes to interim condensed consolidated financial statements.

F-2

VISCOUNT SYSTEMS, INC.

Interim Condensed Consolidated Statements of Operations

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009 and 2008

		2009			2008
Sales	$	1,070,644		$	1,307,638
Cost of sales and services		504,208			543,696
Gross profit		566,436			763,942
Expenses
Selling, general and administrative		522,985			728,338
Research and development		43,237			86,321
Depreciation and amortization		16,684			8,224
		582,906			822,883
Loss before other items		(16,470	)		(58,941	)
Other items
Interest income		80			609
Interest expense		(3,763	)		(7,012	)
		(3,683	)		(6,403	)
Loss before income taxes		(20,153	)		(65,344	)
Provision for income taxes		-			-
Net loss	$	(20,153	)	$	(65,344	)
Basic and diluted net loss per common share	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding,
Basic and diluted		17,841,250			17,841,250

See accompanying notes to interim condensed consolidated financial statements.

F-3

VISCOUNT SYSTEMS, INC.

Interim Condensed Consolidated Statement of Stockholders' Equity

(Unaudited)

(Expressed in Canadian dollars)

					Additional
	Common Stock				paid-in
	Shares		Amount		capital		Accumulated deficit			Total
Balance, December 31, 2008	17,841,250	$	25,434	$	2,353,030	$	(1,886,351	)	$	492,113
Net loss	-		-		-		(20,153	)		(20,153	)
Balance, March 31, 2009	17,841,250	$	25,434	$	2,353,030	$	(1,906,504	)	$	471,960

See accompanying notes to interim condensed consolidated financial statements.

F-4

VISCOUNT SYSTEMS, INC.

Interim Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009 and 2008

		2009			2008
Operating activities:
Net loss	$	(20,153	)	$	(65,344	)
Items not involving cash:
Depreciation and amortization		16,684			8,224
Changes in non-cash working capital balances (note 9)		65,769			(198,623	)
Net cash provided by (used in) operating activities		62,300			(255,743	)
Investing activities:
Purchase of equipment		-			-
Net cash used in investing activities		-			-
Financing activities:
Proceeds from (repayment of) bank indebtedness		(20,911	)		139,726
Proceeds from stockholder loan		-			100,000
Repayment of notes payable		(30,000	)		-
Net cash provided by (used in) financing activities		(50,911	)		239,726
Increase (decrease) in cash		11,389			(16,017	)
Cash, beginning of period		255,172			111,173
Cash, end of period	$	266,561		$	95,156
Supplementary information:
Interest paid	$	3,763		$	7,012
Income taxes paid	$	-		$	-

See accompanying notes to interim condensed consolidated financial statements.

F-5

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

1. Basis of presentation

These unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with instructions for Form 10-Q and by Article 8-03 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America for a complete set of annual financial statements. Readers of these statements should read the audited annual consolidated financial statements of the Company filed on Form 10-K for the year ended December 31, 2008 in conjunction therewith. Operating results for the periods presented are not necessarily indicative of the results that will occur for the year ending December 31, 2009 or for any other interim period.

The financial information as at March 31, 2009 and for the three month periods ended March 31, 2009 and 2008 is unaudited; however, such financial information includes all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for the fair presentation of the financial information in conformity with accounting principles generally accepted in the United States of America. The accompanying condensed consolidated balance sheet as of December 31, 2008 has been derived from the audited consolidated balance sheet as of that date included in the Form 10-K.

These financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. These financial statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern.

The Company has incurred losses and the ability of the Company to continue as a going-concern depends upon its ability to restore profitable operations and to continue to raise adequate financing. Management is actively targeting sources of additional financing which would assure continuation of the Company’s operations.

There can be no assurance that the Company will be able to restore profitable operations and continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realize on its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded on the balance sheets.

F-6

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

2. Inventory

		March 31,		December 31,
		2009		2008
Raw materials	$	160,482	$	326,107
Work in process		37,665		29,830
Finished goods		246,992		200,635
	$	445,139	$	556,572

3. Equipment

				Accumulated		Net book
March 31, 2009		Cost		depreciation		value
Computer equipment	$	110,838	$	90,613	$	20,225
Office furniture and equipment		77,269		52,061		25,208
Leasehold improvements		46,814		43,206		3,608
	$	234,921	$	185,880	$	49,041

				Accumulated		Net book
December 31, 2008		Cost		depreciation		value
Computer equipment	$	110,838	$	89,566	$	21,272
Office furniture and equipment		77,269		41,999		35,270
Leasehold improvements		46,814		42,855		3,959
	$	234,921	$	174,420	$	60,501

F-7

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

4.	Intangible assets
	On May 16, 2003, the Company consummated an agreement for the purchase of certain assets of Telus Corporation (“Telus”) comprised primarily of service agreements for a product sold by Telus known as “Enterphone 2000”. At December 31, 2003, the Company had acquired 2,215 service agreements for which it paid a total of $208,921. At March 31, 2009, the Company held 1,615 service agreements (December 31, 2008 – 1,630) at a cost, net of accumulated amortization of $83,568 (December 31, 2008 - $78,345), of $125,353 (December 31, 2008 - $130,576).
5.	Bank indebtedness
	Bank indebtedness represents cheques written in excess of funds on deposit of $21,864 (December 31, 2008 - $17,775) and amounts drawn under a bank credit facility of $15,000 (December 31, 2008 - $40,000) available to a maximum of $500,000. Amounts outstanding under the bank credit facility bear interest at the bank’s prime lending rate plus 1.75% and are repayable on demand. The facility is secured by substantially all of our assets under a general security agreement. The Company is required to maintain a current ratio greater than 1.5:1, measured quarterly, and a debt to tangible net worth ratio less than 1.5:1, measured annually, under the terms of the demand facility agreement. For purposes of debt covenant calculations, amounts due to stockholders are considered a component of equity and not a liability. The Company is also allowed to draw on the credit facility up to 75% of accounts receivable less than 90 days. At March 31, 2009, the Company was in compliance with the ratio requirements.
	During the year ended December 31, 2006, the bank required additional security for the credit facility consisting of a pledge of personal property of a significant shareholder.

F-8

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

6.	Due to stockholders
	Amounts due to stockholders are non-interest bearing, unsecured and have no fixed terms of repayment.
	During the 2008 fiscal year, the President loaned the Company $100,000. The loan bears interest at 9.5% per annum, is unsecured and has no fixed terms of repayment.
7.	Notes payable
	The note payable to an individual bears interest at 8% per annum, is unsecured, and is due December 31, 2009. Principal prepayments are made at the discretion of the Board of Directors.
8.	Capital stock
	Stock Options
	A summary of the stock option activity is as follows:

	Number of options		Weighted average
			Exercise price
Outstanding at December 31, 2008	3,363,800		US$0.30
Granted	-		-
Exercised	-		-
Expired/cancelled	-		-
Outstanding at March 31, 2009	3,363,800	$	0.30

F-9

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

8.	Capital stock (cont’d…)
	A summary of the stock options outstanding and exercisable at March 31, 2009 is as follows:

		Weighted
		Average	Weighted
		Remaining	Average	Aggregate
Exercise Price	Number	Contractual	Exercise	Intrinsic
		Life	Price	Value
US$0.12	2,068,750	4.47 years	US$0.12	US$ -
$0.18	11,250	0.73 years	$ 0.18	$ -
$0.40	327,500	3.34 years	$ 0.40	$ -
$0.45	7,500	0.73 years	$ 0.45	$ -
$0.55	5,000	0.73 years	$ 0.55	$ -
$0.60	10,000	0.73 years	$ 0.60	$ -
$0.65	933,800	2.73 years	$ 0.65	$ -
	3,363,800	3.84 years	$ 0.30	$ -

F-10

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

8.	Capital stock (cont’d…)
	The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock price of US$0.05 per share as of March 31, 2009 (December 31, 2008 – US$0.07), which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options vested and exercisable as of March 31, 2009 was nil (March 31, 2008 – 2,080,000). The total intrinsic value of options exercised during the quarter ended March 31, 2009 was $nil (March 31, 2008 - $nil).
	Warrants
	A summary of warrant activity is as follows:

	Number of warrants	Weighted average
		Exercise price
Outstanding at December 31, 2008	1,677,550	US$ 0.25
Granted	-	-
Exercised	-	-
Expired	-	-
Outstanding at March 31, 2009	1,677,550	0.25

A summary of the warrants outstanding and exercisable at March 31, 2009 is as follows:

		Weighted
		Average	Weighted
		Remaining	Average
Exercise Price	Number	Contractual	Exercise
		Life	Price
US$0.25	1,677,550	3.05 years	US$0.25

F-11

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

9. Changes in non-cash working capital balances

		Three months ended
		March 31,
		2009			2008
Trade accounts receivable	$	66,073		$	(298,915	)
Inventory		111,433			28,174
Prepaid expenses		4,637			-
Lease receivable		301			253
Accounts payable and accrued liabilities		(107,561	)		81,125
Deferred revenue		(9,114	)		(9,260	)
	$	65,769		$	(198,623	)

10.	Commitments and contingencies
	The Company is committed to make minimum annual payments on its premises, automobiles and office equipment operating leases that expire in 2012 as follows:

Year or period ending December 31:
2009	$	139,231
2010		94,361
2011		15,576
2012		1,221

Rent expense included in the statements of operations for the three months ended March 31, 2009 is $32,765 (2008 - $31,862).

The Company was named as the sole defendant in litigation for wrongful dismissal that involves a former employee. The Company filed a defense to this claim and is actively defending its position. At this time, the likelihood of the outcome is not determinable and no provision has been made for the claim in the accounts.

F-12

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

11.	Segment information
	(a)	Operating segments:
		Commencing with the acquisition of the service agreements from Telus on May 16, 2003, as described in Note 4 herein and Note 6 in the financial statements in the most recent Form 10-K, the Company has organized its business into two reportable segments: manufacturing and servicing. The manufacturing segment designs, produces and sells intercom and door access control systems that utilize telecommunications wiring to control access to buildings and other facilities for security purposes. The servicing segment provides maintenance to these intercom and other door access control systems. The segments’ accounting policies are the same as those described in Note 2 in the financial statements in the most recent Form 10-K. Management evaluates performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses, if any. Retail prices are used to report intersegment sales.
		Information as to these reportable segments for the three ended March 31, 2009 and 2008 are as follows:

For the three months ended March 31, 2009		Manufacturing			Servicing		Total
Sales to external customers	$	695,918		$	374,726	$	1,070,644
Depreciation and amortization		11,461			5,223		16,684
Interest expense, net		3,163			600		3,763
Segment income (loss) before income taxes		(115,564	)		95,411		(20,153	)
Total assets		1,285,736			125,353		1,411,089

For the three months ended March 31, 2008		Manufacturing			Servicing			Total
Sales to external customers	$	858,196		$	449,442		$	1,307,638
Depreciation and amortization		3,001			5,223			8,224
Interest expense, net		5,612			1,400			7,012
Segment income (loss) before income taxes		(62,462	)		(2,882	)		(65,344	)
Total assets		1,822,503			146,245			1,968,748

F-13

VISCOUNT SYSTEMS, INC.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

Three months ended March 31, 2009

11.	Segment information (cont’d…)
	(b)	Of the total revenues for the three months ended March 31, 2009, $196,614 (2008 - $214,030) was derived from U.S.-based customers and $874,030 (2008 - $1,093,608) from Canadian-based customers.
		Substantially all of the Company's operations, assets and employees are located in Canada.
	(c)	Major customers:
		No customer represented more than 10% of total revenues in either of the three months ended March 31, 2009 and 2008.
	(d)	Products and services:
		Enterphone 2000 sales represented 10% of total revenue during the three months ended March 31, 2009 (2008 – 18%). MESH sales represented 57% of total revenue during the three months ended March 31, 2009 (2008 – 52%). The balance of the Company’s revenues are derived from other products such as access tracking and control, closed circuit monitors, infrared and radio frequency remotes and servicing of intercom equipment.

F-14

Item 2. Management Discussion and Analysis or Plan of Operation

Results of Operations

Sales for the three months ended March 31, 2009 and 2008 were $1,070,644 and $1,307,638, respectively, a decrease of $236,994 or 18.1% . This decrease was due to decreased MESH and Enterphone sales. MESH sales for the three months ended March 31, 2009 and 2008 were $605,138 and $677,532, respectively, a decrease of $72,394 or 10.7% . MESH is a convergent technology developed by Viscount that increases security at a reduced cost of hardware, cabling and installation, and with simplified database management. Enterphone 2000 sales for the three months ended March 31, 2009 and 2008 were $103,978 and $236,223, respectively, a decrease of $132,245 or 56%. As an old technology, Enterphone sales have been dropping for several years and negating much of our MESH growth. MESH EPX is the replacement for our old Enterphone system. MESH EPX is the next generation of Enterphone systems but with features that are compatible with high speed internet and other newer technologies. With MESH EPX, we can anticipate recovering our lost Enterphone revenue while continuing to increase our MESH business.

Management believes that sales of the MESH product will continue to represent an increasing proportion of total sales relative to sales of our Enterphone products. For the three months ended March 31, 2009 and 2008, MESH sales were 56.5% and 51.8%, respectively, of total sales.

We also provide Enterphone support and maintenance services pursuant to service contracts that were assigned to us from Telus Corporation in 2003. Sales from the 1,615 existing service contracts continue to be steady. On average, each service contract represents ongoing revenues of approximately $38 per month, inclusive of parts and labor. Typical customers include strata management and building owners as well as various residential, business and industrial users of Enterphone access control and security systems. During the three months ended March 31, 2009 and 2008, customer service contracts and new equipment sales generated aggregate sales revenues of $374,726 and $449,442, respectively, a decrease of $74,716 or 16.6% . These sales included MESH sales by the service division.

The intangible assets held by the Company are comprised primarily of service contracts for our Enterphone 2000 product line. The number of service agreements held by the Company was 1,615 at March 31, 2009, as compared to 1,630 and 1,645 at December 31, 2008 and March 31, 2008, respectively. During the first quarter of 2009, the Company performed a test for impairment in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) and evaluated the status of service agreements. Management determined that no charge for impairment was required but the continuing reduction in the number of service contracts held, indicated that the intangible asset should be deemed to have a definitive life based on the provisions of SFAS 142. Accordingly, the Company continued to amortize the cost of the service agreements on a straight-line basis over an estimated useful life of 10 years, which became effective as of April 1, 2005. At March 31, 2009, the cost of the service agreements, net of accumulated amortization, was $125,353.

Cost of sales and services as a percentage of sales was 47.1 and 41.6% for the three months ended March 31, 2009 and 2008, respectively. Cost of sales has increased slightly during these two comparative periods, due to the increased cost of materials. Management continues to focus on controlling the input costs by using multiple suppliers to ensure that the best and most cost effective raw materials are used in all of our products.

Gross profit for the three months ended March 31, 2009 and 2008 was $566,436 and $763,942, respectively, a decrease of $197,506 or 25.9% . This decrease in gross profit corresponds with decreased sales and increased cost of sales for the three months ended March 31, 2009.

3

Selling, general and administrative expenses for the three months ended March 31, 2009 and 2008 were $522,985 and $728,338, respectively, a decrease of $205,353 or 28.2% . This decrease was due to decreases in variable costs such as advertising, tradeshow and various office expenses. For the three months ended March 31, 2009 and 2008, selling, general and administrative expenses, as a percentage of sales, were 48.8% and 55.7%, respectively.

Research and development costs for the three months ended March 31, 2009 and 2008 were $43,237 and $86,321, respectively, a decrease of $43,084 or 49.9% . Research and development costs decreased during the first quarter of 2009, due to several completed stages of MESH development.

Net loss for the quarters ended March 31, 2009 and 2008 were $20,153 and $65,344, respectively, a decrease in net loss of $45,191. The decrease in net loss during the first quarter of 2009 was the result of decreased variable costs such as tradeshow, traveling, and various office expenses.

Liquidity and Capital Resources

Cash as of March 31, 2009, as compared to December 31, 2008 was $266,561 and $255,172, respectively. Cash as of March 31, 2008 was $95,156. We have a bank credit facility available for an operating loan of up to a maximum of $500,000 at the prime lending rate plus 1.75% . Amounts drawn are repayable on demand. At March 31, 2009, $36,864 was drawn on this facility. The facility is secured by substantially all of our assets under a general security agreement.

At March 31, 2009, working capital was $297,566, as compared to a working capital of $301,036 at December 31, 2008. Working capital has decreased by $3,470. The current ratio at March 31, 2009 was 1.32 to 1.0, as compared with 1.27 to 1.0 at December 31, 2008.

The accounts receivable turnover ratio at March 31, 2009 was 42 days, as compared 61 days at December 31, 2008 and 63 days at March 31, 2008. The accounts receivable reserve was $311,168 at March 31, 2009, as compared to $336,776 at December 31, 2008. The accounts receivable reserve has decreased by $25,608 or 7.6%, since the year ended December 31, 2008. Management continues to follow-up on customer accounts to improve cash flow and to minimize bad debts. There had been no significant or material business conditions that would warrant further increases to the reserve at this time.

For the three months ended March 31, 2009, there were minimal capital expenditures.

To date, we have not invested in derivative securities or any other financial instruments that involve a high level of complexity or risk. We expect that in the future, any excess cash will continue to be invested in high credit quality, interest-bearing securities.

We will likely require additional funds to support the development and marketing of our new MESH product. There can be no assurance that additional financing will be available on acceptable terms, if at all. If adequate funds are not available, we may be unable to develop or enhance our products, take advantage of future opportunities, respond to competitive pressures, and may have to curtail operations.

There are no legal or practical restrictions on the ability to transfer funds between parent and subsidiary companies.

We do not have any material commitments for capital expenditures as of March 31, 2009.

There are no known trends or uncertainties that will have a material impact on revenues.

4

Related Party Transactions

In February of 2008, Stephen Pineau, president of Viscount, loaned the Company $100,000. The loan bears interest at 9.5% per annum, is unsecured and has no fixed terms of repayment.

Recently Issued Accounting Standards

There were no new accounting standards issued during this period ended March 31, 2009.

Item 4(T). Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of March 31, 2009. Based on that evaluation, our principal executive officer and principal financial officer have concluded that as of March 31, 2009, we have maintained effective disclosure controls and procedures in all material respects, including those necessary to ensure that information required to be disclosed in reports filed or submitted with the SEC (i) is recorded, processed, and reported within the time periods specified by the SEC, and (ii) is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow for timely decision regarding required disclosure.

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

PART II – OTHER INFORMATION

Item 6. Exhibits

31.1	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934
32.1	Section 1350 Certification of the Principal Executive Officer and Principal Financial Officer

5

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 15, 2009	VISCOUNT SYSTEMS, INC.
	(Registrant)
	By: /s/ Stephen Pineau
	Stephen Pineau, President
	Principal Executive Officer
	and Principal Financial Officer

6

EX-31.1

EXHIBIT 31.1

CERTIFICATION 
PURSUANT TO RULE 13a-14(a) OR 15d-14(a)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

I, Stephen Pineau, certify that:

1.	I have reviewed this report on Form 10-Q for the fiscal quarter ended March 31, 2009 of Viscount Systems, Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s control over financial reporting.

Date: May 15, 2009	By:	/s/ Stephen Pineau
		Stephen Pineau
		Principal Executive Officer and Principal Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
AND RULE 13a-14(b) OR RULE 15d-14(b)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of Viscount Systems, Inc. (the "Company") on Form 10-Q for the fiscal quarter ended March 31, 2009 as filed with the Securities and Exchange Commission on May 15, 2009 (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 15, 2009	/s/ Stephen Pineau
	Stephen Pineau
	Principal Executive Officer and Principal Financial Officer