Restatement

6 Months Ended

Jun. 30, 2011

Note 4: Restatement

The financial statements for June 30, 2010 were restated pursuant to comments received from the Securities and Exchange Commission (the "Commission") to our Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2009 and to include additional changes in presentation of certain accounts in the financial statements.

The accompanying financial statements for the three and six months ended June 30, 2010 have been restated to reflect the corrections in accordance with FASB ASC 250-10-50-7, “Accounting Change and Error Corrections Disclosure”. This restatement is due to corrections of errors in previously reported financial statements.

Effects on previously issued financial statements as of June 30, 2010 as follows:

Statement of operations for the three months ended June 30, 2010:
Increase in general and administrative expenses	$	160,814
Increase in interest expense, net		15,365
Increase in net loss attributable to Suspect Detection Systems Inc.	$	176,179
Statement of operations for the six months ended June 30, 2010:
Increase in general and administrative expenses	$	339,128
Increase in interest expense, net		18,463
Increase in net loss attributable to Suspect Detection Systems Inc.	$	357,591

Statement of Operations for the Six months ended June 30, 2010

	Previously
	reported			Net Change					Restated

Revenues, net	$	1,337,602							$	1,337,602
Cost of Goods Sold		69,748								69,748
Gross Profit		1,267,854								1,267,854 1,267,854
Expenses:
Research and development		209,861								209,861
Selling, general and administrative		1,119,418			339,128		a,b,c,d, e,f,g,h,i,j			1,458,546
Total operating expenses		1,329,279								1,668,407

(Loss) from Operations		(61,425	)							(400,553	)
Interest expense		123			(18,463	)		j		(18,340	)
Net (loss)		(61,302	)							(418,893	)
Net (loss) Attributable to Noncontrolling Interest		(106,666	)							(106,666	)
Net (loss) attributable to Suspect Detection Systems Inc.	$	(167,968	)						$	(525,559	)

(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted	$	(0.01	)						$	(0.01	)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted		73,483,285			(7,443,617	)		k		66,039,668

(a) Correction of error of $49,500 originally included in selling, general and administrative for consultants fees which should have not been expensed.

(b) Correction of error of $5,000 originally included in selling, general and administrative for insurance premium for colander year 2010, which was paid in advanced in 2009 and should have been recorded as prepaid expenses and an error of $7,000 originally included in selling, general and administrative for insurance premium for colander year 2010, which should have been recorded as prepaid expenses.

(c) Correction of error of $12,000 originally included in selling, general and administrative for officer’s compensation which should have not been expensed.

(d) Correction of error of $49,595 originally not included in selling, general and administrative for consultants fees which should have been expensed.

(e) Correction of error of $31,035 originally not included in selling, general and administrative for general charges from SDS Israel, which should have been expensed.

(f) Correction of error of $12,500 originally not included selling, general and administrative for directorship fees of the Chairman of the Board, and $16,274 originally not included selling, general and administrative for the compensation of the chief executive officer

(g) Correction of error involving of amortized fair value of 2,000,000 options that were granted to the chairman of the Board and a member of the advisory board in the amount of $90,434.

(h) Correction of error involving of amortized fair value of 1,550,200 options that were granted to nine agents of SDS-Israel in the amount of $163,054. The options are vested within one year of the grant date and they are execrable at $0.15 per share and no later than three years from the grant date.

(i) Correction of error involving of fair value of 450,000 warrants that were granted to a consultant of the Company in the amount of $49,888. The warrants are execrable at $0.15 per share and no later than two years from the grant date.

(j) Reclassification of finance expenses in the amount of $18,463 from selling, general and administrative expenses.

(k) Correction of error involving the calculation of the basic and diluted weighted average number of Common Shares outstanding.

Statement of Operations for the three months ended June 30, 2010

	Previously
	reported			Net Change					Restated
Revenues, net	$	717,403							$	717,403
Cost of Goods Sold		31,409								31,409
Gross Profit		685,994								685,994
Expenses:
Research and development		177,671								177,671
Selling, general and administrative		572,607			160,814		a,b,c, d,e,f,g,h,i			733,421
Total operating expenses		750,278								911,022
(Loss) from Operations		(64,284	)							(225,098	)
Interest expense		123			(15,365	)		i		(15,242	)
Net (loss)		(64,161	)							(240,340	)
Net (loss) Attributable to Noncontrolling Interest		(20,919	)							(20,919	)
Net (loss) attributable to Suspect Detection Systems Inc.	$	(85,080	)		(176,179	)			$	(261,259	)

(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted	$	(0.00	)						$	(0.00	)
Weighted Average Number of Common Shares
Outstanding - Basic and Diluted		73,977,031			(7,667,363	)		j		66,309,668

(a) Correction of error of $24,750 originally not included in selling, general and administrative for consultants fees which should have been expensed.

(b) Correction of error of $12,000 originally included in selling, general and administrative for officer’s compensation which should have not been expensed.

(c) Correction of error of $49,595 originally not included in selling, general and administrative for consultants fees which should have been expensed.

(d) Correction of error of $12,850 originally not included in selling, general and administrative for general charges from SDS Israel, which should have been expensed.

(e) Correction of error of $6,250 originally not included selling, general and administrative for directorship fees of the Chairman of the Board, and $8,137 originally not included selling, general and administrative for the compensation of the chief executive officer

(f) Correction of the additional paid-in capital in the amount of $ (136,839) and the accumulated deficit in the amount of $ (346,325) due to the restatements of the financial statements to the fiscal year ended at December 31, 2009.

(g) Correction of error involving of amortized fair value of 2,000,000 options that were granted to the chairman of the Board and a member of the advisory board in the amount of $ (14,766).

(h) Correction of error involving of amortized fair value of 1,550,200 options that were granted to nine agents of SDS-Israel in the amount of $81,527. The options are vested within one year of the grant date and they are execrable at $0.15 per share and no later than three years from the grant date.

(i) Reclassification of finance expenses in the amount of $15,365 from selling, general and administrative expenses.

(j) Correction of error involving the calculation of the basic and diluted weighted average number of Common Shares outstanding

Statement of Cash Flows for the six months ended June 30, 2010

	Previously			Net Change			Restated
	reported
Operating Activities:
Net (loss)	$	(61,302	)	$	(357,591	)	$	(418,893	)
Adjustments to reconcile net (loss) to net cash
Common stock compensation		172,000			-			172,000
Stock options compensation		71,884			227,521			299,405
Stock warrants issued to a consultant		-			49,888			49,888
Depreciation		3,058			-			3,058
Changes in Assets and Liabilities-
Accounts receivable		(17,664	)					(17,664	)
Inventory		(15,484	)		30,968			15,484
Prepaid expenses and other receivables		(52,112	)		(15,282	)		(67,394	)
Accounts payable - Trade		8,489			-			8,489
Accrued liabilities		114,976			-			114,976
Advances from customers, net		(784,276	)		-			(784,276	)
Deferred revenues		160,822			-			160,822
Due to related parties		-			105,650			105,650
Accrued severance pay		(2,176	)		(36,576	)		(38,752	)


Net Cash (Used in) Operating Activities	(401,785	)	4,578		(397,207	)

Investing Activities:
Increase in restricted cash	-		(100,000	)	(100,000	)
Prepaid expenses, non-current	-		(2,313	)	(2,313	)
Increase in severance pay fund	(36,576	)	36,576		-
Purchases of Property and Equipment	(11,067	)	-		(11,067	)

Net Cash Provided by (Used in) Investing Activities	(47,643	)	(65,737	)	(113,380	)

Financing Activities:
Issuance of common stock for cash		95,000		-			95,000
Due to related party		38,841		(38,841	)		-
Net Cash Provided by Financing Activities		133,841		(38,841	)		95,000

Net Increase (Decrease) in Cash		(315,587	)	(100,000	)		(415,587	)
Cash and Cash Equivalents - Beginning of Period		717,758					701,931
Cash and Cash Equivalents - End of Period	$	386,344					286,344
Cash and Cash Equivalents - End of Period:
Cash in bank	$	701,931				$	701,931
Restricted cash		15,827		(15,827	)		-
Total	$	717,758				$	701,931
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	-				$	-
Income taxes	$	-				$	-

Suspect Detection Systems, Inc. 10-Q/A