UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[X]
QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30,
2020
[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission
file number 000-30178
VIEW
SYSTEMS, INC.
(Exact
name of registrant as specified in its charter)
|
Colorado |
|
59-2928366 |
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
7833
Walker Drive, Suite 520, Greenbelt, MD 20770
(Address
of principal executive offices) (Zip Code)
(410)
236-8200
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
|
COMMON |
|
VSYM |
|
OTCBB |
Indicate
by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 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 [
] No [X]
Indicate
by check mark whether the registrant has submitted electronically
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 [X]
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer”, “smaller reporting company” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
|
Large
accelerated |
|
Accelerated |
|
Non-accelerated |
|
Smaller
reporting |
|
Emerging
growth |
|
filer
[ ] |
|
filer
[ ] |
|
filer
[ ] |
|
company
[X] |
|
company
[ ] |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ]
No [X]
Indicate
the number of shares outstanding of each of the issuer’s classes of
common stock, as of the latest practicable date.
|
Class |
|
December
15, 2020 |
|
Common
Stock, $.001 par value per share |
|
3,852,740,396 |
VIEW
SYSTEMS, INC.
FORM
10-Q
FOR
THE PERIOD ENDED June 30, 2020
INDEX
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995
Information
included in this Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended (“Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (“Exchange Act”). This information
may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of View Systems, Inc. (the “Company”), to be
materially different from future results, performance or
achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions
and describe future plans, strategies and expectations of the
Company, are generally identifiable by use of the words “may,”
“will,” “should,” “expect,” “anticipate,” “estimate,” “believe,”
“intend,” or “project” or the negative of these words or other
variations on these words or comparable terminology. These
forward-looking statements are based on assumptions that may be
incorrect, and there can be no assurance that these projections
included in these forward-looking statements will come to pass.
Actual results of the Company could differ materially from those
expressed or implied by the forward-looking statements as a result
of various factors. Except as required by applicable laws, the
Company has no obligation to update publicly any forward-looking
statements for any reason, even if new information becomes
available or other events occur in the future.
View
Systems, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
| |
|
September 30, |
|
|
December 31, |
|
| |
|
2020 |
|
|
2019 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
- |
|
|
$ |
835 |
|
|
Due to related party |
|
|
20,000 |
|
|
|
20,000 |
|
| |
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
20,000 |
|
|
|
20,835 |
|
| |
|
|
|
|
|
|
|
|
|
Intangible Assets (Net) |
|
|
21,080 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
41,080 |
|
|
$ |
20,835 |
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
Bank overdraft |
|
$ |
568 |
|
|
$ |
- |
|
|
Accounts payable |
|
|
163,964 |
|
|
|
161,715 |
|
|
Accrued and withheld payroll taxes payable |
|
|
134,237 |
|
|
|
134,237 |
|
|
Accrued compensation |
|
|
672,115 |
|
|
|
492,115 |
|
|
Accrued interest payable |
|
|
33,264 |
|
|
|
13,841 |
|
|
Loans from stockholders |
|
|
263,512 |
|
|
|
266,512 |
|
|
Notes payable |
|
|
251,733 |
|
|
|
142,421 |
|
|
Derivative liability |
|
|
822,543 |
|
|
|
383,852 |
|
| |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,341,936 |
|
|
|
1,594,693 |
|
| |
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
|
Convertible preferred stock, authorized 10,000,000 shares, $.001
par value, Issued and outstanding 5,589,647 |
|
|
5,590 |
|
|
|
5,590 |
|
|
Common stock, authorized 5,000,000,000 shares, $.001 par value,
Issued and outstanding 2,439,158,559 |
|
|
2,439,158 |
|
|
|
|
|
|
Issued and outstanding 560,915,727 |
|
|
|
|
|
|
560,915 |
|
|
Common stock issuable |
|
|
42,500 |
|
|
|
20,500 |
|
|
Additional paid in capital |
|
|
26,581,905 |
|
|
|
27,870,014 |
|
|
Accumulated deficit |
|
|
(31,370,009 |
) |
|
|
(30,030,877 |
) |
| |
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
|
(2,300,856 |
) |
|
|
(1,573,858 |
) |
| |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit |
|
$ |
41,080 |
|
|
$ |
20,835 |
|
The accompanying notes are an integral part of these consolidated
financial statements
View Systems, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
| |
|
For
the Three Months Ended |
|
|
For
the Nine Months Ended |
|
| |
|
September 30, |
|
|
September 30, |
|
| |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,400 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,400 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
11,705 |
|
|
|
- |
|
|
|
65,694 |
|
|
|
4,297 |
|
|
Depreciation and amortization |
|
|
2,635 |
|
|
|
- |
|
|
|
2,635 |
|
|
|
- |
|
|
Professional fees |
|
|
15,000 |
|
|
|
- |
|
|
|
18,850 |
|
|
|
10,000 |
|
|
Salaries and benefits |
|
|
60,000 |
|
|
|
35,000 |
|
|
|
180,000 |
|
|
|
58,774 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
89,340 |
|
|
|
35,000 |
|
|
|
267,179 |
|
|
|
73,071 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(89,340 |
) |
|
|
(35,000 |
) |
|
|
(267,179 |
) |
|
|
(71,671 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
Income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative expense |
|
|
1,070,960 |
|
|
|
(38,063 |
) |
|
|
(860,309 |
) |
|
|
(166,138 |
) |
|
Interest expense |
|
|
(38,640 |
) |
|
|
(36,307 |
) |
|
|
(211,644 |
) |
|
|
(70,476 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
|
1,032,320 |
|
|
|
(74,370 |
) |
|
|
(1,071,953 |
) |
|
|
(236,614 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
942,980 |
|
|
$ |
(109,370 |
) |
|
$ |
(1,339,132 |
) |
|
$ |
(308,285 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) per share (basic and diluted) |
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding(basic and diluted) |
|
|
1,972,681,668 |
|
|
|
372,520,421 |
|
|
|
1,475,807,068 |
|
|
|
372,520,421 |
|
The accompanying notes are an integral part of these consolidated
financial statements
View Systems, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Deficit (Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Retained |
|
|
|
|
| |
|
Preferred |
|
|
Common |
|
|
Stock |
|
|
Paid-in |
|
|
Earnings |
|
|
|
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Issuable |
|
|
Capital |
|
|
(Deficit) |
|
|
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2019 |
|
|
5,589,647 |
|
|
$ |
5,590 |
|
|
|
560,915,727 |
|
|
$ |
560,915 |
|
|
$ |
20,500 |
|
|
$ |
27,870,014 |
|
|
$ |
(30,030,877 |
) |
|
$ |
(1,573,858 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Convertible
Debentures |
|
|
- |
|
|
|
- |
|
|
|
168,767,870 |
|
|
|
168,768 |
|
|
|
- |
|
|
|
(35,528 |
) |
|
|
- |
|
|
|
133,240 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount on covertible
debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
112,750 |
|
|
|
- |
|
|
|
112,750 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock subscribed in private
placement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ended March
31, 2020 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(584,872 |
) |
|
|
(584,872 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, March 31, 2020 |
|
|
5,589,647 |
|
|
|
5,590 |
|
|
|
729,683,597 |
|
|
|
729,683 |
|
|
|
25,500 |
|
|
|
27,947,236 |
|
|
|
(30,615,749 |
) |
|
|
(1,907,740 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Convertible
Debentures |
|
|
- |
|
|
|
- |
|
|
|
766,509,349 |
|
|
|
766,509 |
|
|
|
- |
|
|
|
(553,409 |
) |
|
|
- |
|
|
|
213,100 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock subscribed in private
placement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,000 |
|
|
|
- |
|
|
|
- |
|
|
|
2,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock subscribed in asset purchase
agreement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,000 |
|
|
|
13,715 |
|
|
|
- |
|
|
|
23,715 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ended June
30, 2020 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,697,240 |
) |
|
|
(1,697,240 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance June 30, 2020 |
|
|
5,589,647 |
|
|
|
5,590 |
|
|
|
1,496,192,946 |
|
|
|
1,496,192 |
|
|
|
37,500 |
|
|
|
27,407,542 |
|
|
|
(32,312,989 |
) |
|
|
(3,366,165 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Convertible
Debentures |
|
|
- |
|
|
|
- |
|
|
|
942,965,613 |
|
|
|
942,966 |
|
|
|
- |
|
|
|
(825,637 |
) |
|
|
|
|
|
|
117,329 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock subscribed in private
placement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ended
September 30, 2020 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
942,980 |
|
|
|
942,980 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30,
2020 |
|
|
5,589,647 |
|
|
$ |
5,590 |
|
|
|
2,439,158,559 |
|
|
$ |
2,439,158 |
|
|
$ |
42,500 |
|
|
$ |
26,581,905 |
|
|
$ |
(31,370,009 |
) |
|
$ |
(2,300,856 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2018 |
|
|
5,589,647 |
|
|
$ |
5,590 |
|
|
|
329,705,526 |
|
|
$ |
329,705 |
|
|
$ |
16,000 |
|
|
$ |
27,486,721 |
|
|
$ |
(28,791,901 |
) |
|
$ |
(953,885 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion
feature |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
65,000 |
|
|
|
- |
|
|
|
65,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Convertible
Debentures |
|
|
- |
|
|
|
- |
|
|
|
38,814,895 |
|
|
|
38,815 |
|
|
|
- |
|
|
|
81,430 |
|
|
|
- |
|
|
|
120,245 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ended March
31, 2019 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(71,629 |
) |
|
|
(71,629 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance March 31, 2019 |
|
|
5,589,647 |
|
|
$ |
5,590 |
|
|
|
368,520,421 |
|
|
$ |
368,520 |
|
|
$ |
16,000 |
|
|
$ |
27,633,151 |
|
|
$ |
(28,863,530 |
) |
|
$ |
(840,269 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ended June
30, 2019 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(127,286 |
) |
|
|
(127,286 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance June 30, 2019 |
|
|
5,589,647 |
|
|
|
5,590 |
|
|
|
368,520,421 |
|
|
|
368,520 |
|
|
|
16,000 |
|
|
|
27,633,151 |
|
|
|
(28,990,816 |
) |
|
|
(967,555 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Convertible
Debentures |
|
|
- |
|
|
|
- |
|
|
|
8,000,000 |
|
|
|
8,000 |
|
|
|
- |
|
|
|
12,800 |
|
|
|
- |
|
|
|
20,800 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ened
September 30, 2019 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(109,370 |
) |
|
|
(109,370 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30,
2019 |
|
|
5,589,647 |
|
|
|
5,590 |
|
|
|
376,520,421 |
|
|
|
376,520 |
|
|
|
16,000 |
|
|
|
27,645,951 |
|
|
|
(29,100,186 |
) |
|
|
(1,056,125 |
) |
The accompanying notes are an integral part of these consolidated
financial statements
View Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
| |
|
For
the Nine Months Ended |
|
| |
|
September 30, |
|
| |
|
2020 |
|
|
2019 |
|
| |
|
|
|
|
|
|
| Cash
flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,339,132 |
) |
|
$ |
(308,285 |
) |
|
Adjustments to reconcile net loss to Net cash used in
operations: |
|
|
|
|
|
|
|
|
|
Accretion of debt discount |
|
|
194,856 |
|
|
|
67,329 |
|
|
Change in value of derivative liability |
|
|
860,309 |
|
|
|
166,138 |
|
| |
|
|
|
|
|
|
|
|
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
(Increase) decrease in cash from: |
|
|
|
|
|
|
|
|
|
Due to related party |
|
|
- |
|
|
|
(26,419 |
) |
|
Increase (decrease) in cash from: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
2,249 |
|
|
|
- |
|
|
Deferred compensation |
|
|
180,000 |
|
|
|
- |
|
|
Accrued interest |
|
|
19,423 |
|
|
|
- |
|
|
Deferred revenue |
|
|
- |
|
|
|
(1,400 |
) |
| |
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(82,295 |
) |
|
|
(102,637 |
) |
| |
|
|
|
|
|
|
|
|
| Cash
flows from financing activities: |
|
|
|
|
|
|
|
|
|
Bank overdraft |
|
|
568 |
|
|
|
73 |
|
|
Net payments for stockholders loans |
|
|
(3,000 |
) |
|
|
- |
|
|
Repayment of notes payable |
|
|
(55,858 |
) |
|
|
- |
|
|
Proceeds from stock subscriptions |
|
|
22,000 |
|
|
|
- |
|
|
Proceeds from notes payable |
|
|
117,750 |
|
|
|
103,000 |
|
| |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
81,460 |
|
|
|
103,073 |
|
| |
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash |
|
|
(835 |
) |
|
|
436 |
|
| |
|
|
|
|
|
|
|
|
|
Cash at beginning of period |
|
|
835 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Cash at end of period |
|
$ |
- |
|
|
$ |
436 |
|
The accompanying notes are an integral part of these consolidated
financial statements
View Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (Continued)
| |
|
For
the Nine Months Ended |
|
| |
|
September 30, |
|
| |
|
2019 |
|
|
2018 |
|
| |
|
|
|
|
|
|
| Non
cash investing and financing activities: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Reduction in loans from shareholders by agreement |
|
$ |
- |
|
|
$ |
301,354 |
|
|
Reduction in nots payable from conversion to stock |
|
$ |
12,000 |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
| Cash
paid for: |
|
|
|
|
|
|
|
|
|
Interest |
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
- |
|
|
$ |
- |
|
The accompanying notes are an integral part of these consolidated
financial statements
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.
NATURE OF
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature
of Operations
View
Systems, Inc. and Subsidiaries (the “Company”) designs, develops
and sells computer software and hardware used in conjunction with
surveillance capabilities. The technology utilizes the compression
and decompression of digital inputs. In March 2002, the Company
acquired Milestone Technology, Inc., which has developed a
concealed weapons detection portal. In July 2009, the Company
acquired FibreXpress, Inc., which is a company that specializes in
developing and selling equipment and components for the fiber optic
and communication cable industries.
During
the second quarter of 2017, the Company established a new business
line in the Erectile Dysfunction Medical market by opening one
clinic within its’ Medical Therapeutics subsidiary. In the fourth
quarter of 2018, the Company sold its Medical Therapeutics division
to another company called Ultimate Sports, Inc.
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with US generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by US generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
For further information, refer to the audited consolidated
financial statements and footnotes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2019.
Basis
of Consolidation
The
consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Milestone Technology,
Inc. and FibreXpress, Inc. All significant intercompany accounts
and transactions have been eliminated in consolidation.
Use
of Estimates
Management
uses estimates and assumptions in preparing financial statements in
accordance with accounting principles generally accepted in the
United States of America. Those estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and
expenses. Actual results could differ from the estimates that were
used.
Cash
and Cash Equivalents
Cash
and cash equivalents include all highly liquid investments with
original maturities of three months or less.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.
NATURE OF
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASU No. 2014-9, “Revenue from
Contracts with Customers” and the related amendments (“Topic 606”)
using the modified retrospective method. Topic 606 was applied to
all uncompleted contracts by recognizing the cumulative effect of
initially applying Topic 606 as an adjustment to the opening
balancer of equity at January 1, 2018. Due to the cumulative net
impact of adopting ASC 606, the January 1, 2018 balance of
accumulated deficit was increased by $51,148, primarily relating to
the accelerated recognition of revenue on installation
projects.
Under
Topic 606, revenue is measured based on consideration specified in
the contract with a customer. A performance obligation is a promise
in a contract to transfer a distinct good or service to the
customer and is the unit of account in Topic 606. Revenue from all
customers is recognized when a performance obligation is satisfied
by transferring control of a product or service to a customer.
Amounts billed to customers for shipping and handling are included
in revenue.
The
Company has three main products, namely the concealed weapons
detection system, the visual first responder system and the
Viewmaxx digital video system. The concealed weapons detection
system and the digital video system each require installation and
training. The customer can engage us for installation and training,
which is a revenue source separate and apart from the sale of the
product. Each product has an unconditional 30 day warranty, during
which time the product can be returned for a complete refund.
Customers can purchase extended warranties, which provide for
replacement or repair of the unit beyond the period provided by the
unconditional warranty.
During
2019, sales consisted of the sale of one demonstration unit and the
fulfillment of extended warranties. The Company did not sell its’
products or installation and training, but rather only fulfilled
extended warranties on its’ existing installed units. Under the new
guidance, there is no change in our revenue recognition for
extended warranty as compared to revenue recognition for these
transactions under the prior revenue standards. The Company
recognizes revenue from extended warranty contracts ratably over
the warranty period.
Property
and Equipment
Property
and equipment is recorded at cost and depreciated over their useful
lives, using the straight-line and accelerated depreciation
methods. Upon sale or retirement, the cost and related accumulated
depreciation are eliminated from the respective accounts, and the
resulting gain or loss is included in the results of operations.
The useful lives of property and equipment for purposes of
computing depreciation are as follows:
| Equipment |
5-7 years |
| Software
tools |
3 years |
Repairs
and maintenance charges which do not increase the useful lives of
assets are charged to operations as incurred. Depreciation expense
for the periods ended September 30, 2020 and 2019 amounted to $0
and $0, respectively.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.
NATURE OF
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Income
Taxes
Income
taxes are recorded under the assets and liabilities method whereby
deferred tax assets and liabilities are recognized for the future
tax consequences, measured by enacted tax rates, attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and
operating loss carry forwards. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in
the period the rate change becomes effective. Valuation allowances
are recorded for deferred tax assets when it is more likely than
not that such deferred tax assets will not be realized.
The
Company files income tax returns in the U.S. federal jurisdictions,
and in various state jurisdictions. The Company is no longer
subject to U.S. federal, state and local examinations by tax
authorities for years prior to 2015. The Company policy is to
recognize interest related to unrecognized tax benefits as income
tax expense. The Company believes that it has appropriate support
for the income tax positions it takes and expects to take on its
tax returns, and that its accruals for tax liabilities are adequate
for all open years based on an assessment of many factors including
past experience and interpretations of tax law applied to the facts
of each matter.
Research
and Development
Research
and development costs are expensed as incurred.
Advertising
Advertising
costs are charged to operations as incurred. Advertising costs for
the periods ended September 30, 2020 and 2019 were $0 and $0,
respectively.
Nonmonetary
Transactions
Nonmonetary
transactions are accounted for in accordance with ASC 845
“Nonmonetary Transactions” which requires the transfer or
distribution of a nonmonetary asset or liability to be based
generally, on the fair value of the asset or liability that is
received or surrendered, whichever is more clearly
evident.
Financial
Instruments
For
most financial instruments, including cash, accounts receivable,
accounts payable and accruals, management believes that the
carrying amount approximates fair value, as the majority of these
instruments are short-term in nature.
Stock-Based
Compensation
The
Company accounts for share-based compensation at fair value.
Share-based compensation cost for stock options granted to
employees, board members and service providers is determined at the
grant date using an option pricing model that uses level 3
unobservable inputs. The value of the award that is ultimately
expected to vest is recognized as expense on a straight-line basis
over the requisite service period.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.
NATURE OF
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Net
Loss Per Common Share
Basic
net loss per common share is computed by dividing net loss
available to common stockholder by the weighted average number of
common shares outstanding. Diluted net loss per common share is
computed by dividing net loss available to common stockholders by
the weighted average number of common shares and dilutive potential
common share equivalents then outstanding. Potential common shares
consist of shares issuable upon the exercise of stock options and
warrants in addition to shares that may be issued in the event that
convertible debt is exchanged for shares of common stock. The
calculation of the net loss per share available to common
stockholders for the periods ended September 30, 2020 and 2019 does
not include potential shares of common stock equivalents, as their
impact would be antidilutive. The following reconciles amounts
reported in the financial statements:
| |
|
Income |
|
|
Weighted
Avg |
|
|
|
|
| |
|
(Loss) |
|
|
Shares |
|
|
Per-share |
|
| |
|
(Numerator) |
|
|
(Denominator) |
|
|
Amount |
|
| |
|
|
|
|
|
|
|
|
|
| Period ended September
30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations which is the amount that is available to
common stockholders |
|
$ |
(1,339,132 |
) |
|
|
1,475,807,068 |
|
|
$ |
(0.00 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Period ended September
30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations
which is the amount that is available to
common stockholders |
|
$ |
(308,285 |
) |
|
|
372,520,421 |
|
|
$ |
(0.00 |
) |
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
2.
GOING
CONCERN
The
Company has incurred and continues to incur, losses from
operations. For the nine months ended September 30, 2020 and 2019,
the Company incurred net losses of $ 1,339,132 and $308,285. The
Company also had a working capital deficiency of $2,321,936 and an
accumulated deficit of $31,370,009 at September 30, 2020. In
addition, certain notes payable have come due and the note holders
are demanding payment.
Management
is very actively working to cure these situations. It has
implemented major plans to for the future growth and development of
the Company. Management is in the process of renegotiating more
favorable repayment terms on the notes payable and the Company
anticipates that these negotiations will result in extended payment
plans.
Historically,
the Company has financed its operations primarily through private
financing. It is management’s intention to finance operations
during 2020 primarily through increased sales although there will
still be a need for additional equity financing. In addition,
management is actively seeking out mergers and acquisitions which
would be beneficial to the future growth of the Company. There can
be no assurance, however, that this financing will be successful
and the Company may be required to further reduce expenses and
scale back operations.
As
described in Note 4, the Company is currently in default on a
$50,000 loan from a stockholder.
The
consolidated financial statements presented above and the
accompanying Notes have been prepared on a going concern basis,
which contemplates the realization of assets and discharge of
liabilities in the normal course of business for the foreseeable
future, and does not include any adjustments to reflect possible
future effects on the recoverability and classification of assets,
or the amounts and classification of liabilities that may result
from the outcome of any extraordinary regulatory action, which
would affect our ability to continue as a going concern.
Due
to the conditions and events discussed above, there is substantial
doubt about the Company’s ability to continue as a going
concern.
3.
NEW
ACCOUNTING PRONOUNCEMENTS
In
February 2016, the FASB issued new guidance on the accounting for
leases, which supersedes previous lease guidance. Under this
guidance, for all leases with terms in excess of one year,
including operating leases, the Company will be required to
recognize on its balance sheet a lease liability and a right-of-use
asset representing its right to use the underlying asset for the
lease term. The new guidance retains a distinction between finance
leases and operating leases and the classification criteria is
substantially similar to previous guidance. Additionally, the
recognition, measurement, and presentation of expenses and cash
flows arising from a lease by a lessee have not significantly
changed. The Company is currently evaluating the impact of this
guidance on its consolidated balance sheets. This guidance is
effective for interim and annual reporting periods beginning after
December 15, 2018 with early adoption permitted. The Company
implemented this standard effective January 1, 2019. Implementation
of the standard did not have a material impact on the Company’s
financial statements.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
4.
NOTES PAYABLE
|
Notes
payable as of September 30, 2020 and December 31, 2019 consists of
the following: |
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
| |
|
|
|
|
|
|
|
Demand
loan payable with interest at 5% per month dated September 18,
2009. The loan is secured by the Company’s accounts receivable. The
note was payable in full on December 17, 2009 and is currently in
default. |
|
$ |
50,000 |
|
|
$ |
50,000 |
|
| |
|
|
|
|
|
|
|
|
| Convertible
promissory note with interest as 8% per year dated January 24,
2018, convertible into the Company’s common stock 50% discount to
the lowest trading price during 25 trading days immediately
preceding conversion. The note was due October 24, 2018 and is
currently in default |
|
|
- |
|
|
|
16,831 |
|
| |
|
|
|
|
|
|
|
|
| Convertible
promissory note with interest as 8% per year dated July 2, 2018,
convertible into the Company’s common stock 50% discount to the
lowest trading price during 25 trading days immediately preceding
conversion. The note was due July 2, 2019 and is currently in
default |
|
|
40,000 |
|
|
|
40,000 |
|
| |
|
|
|
|
|
|
|
|
| Convertible
promissory note with interest as 8% per year dated August 19, 2019,
convertible into the Company’s common stock 50% discount to the
lowest trading price during 25 trading days immediately preceding
conversion. The note is due August 19, 2020 |
|
|
- |
|
|
|
38,000 |
|
| |
|
|
|
|
|
|
|
|
| Convertible
promissory note with interest as 10% per year dated October 8,
2019, convertible into the Company’s common stock 50% discount to
the lowest trading price during 25 trading days immediately
preceding conversion. The note is due October 20, 2020. |
|
|
6,671 |
|
|
|
50,000 |
|
| |
|
|
|
|
|
|
|
|
| Convertible
promissory note with interest as 8% per year dated September 4,
2019, convertible into the Company’s common stock 50% discount to
the lowest trading price during 25 trading days immediately
preceding conversion. The note is due September 4, 2020 |
|
|
79,500 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Convertible
promissory note with interest at 8% per year dated January 8, 2020,
convertible into the Company’s common stock 50% discount to the
lowest trading price during 25 trading days Immediately preceding
the conversion. The note is due January 8, 2021 |
|
|
112,750 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Convertible
promissory note with interest as 8% per year dated October 22,
2019, convertible into the Company’s common stock 50% discount to
the lowest trading price during 25 trading days immediately
preceding conversion. The note is due October 22, 2020 |
|
|
53,000 |
|
|
|
53,000 |
|
| |
|
|
|
|
|
|
|
|
| Other |
|
|
10,000 |
|
|
|
- |
|
| |
|
$ |
272,421 |
|
|
$ |
247,831 |
|
|
Discount
on convertible notes |
|
|
(20,688 |
) |
|
|
(105,410 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
$ |
251,733 |
|
|
$ |
142,421 |
|
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
5.
INCOME TAXES
For
income tax purposes the Company has net operating loss carry
forwards of $27,608,848 as of December 31, 2019 that may be used to
offset future taxable income. In the instance of future corporate
acquisitions, the net operating losses may be used to offset the
future taxable income of a qualifying subsidiary corporation which
meets IRS regulations governing such situations. The losses have
accumulated since 1998 and started to expire in 2018. IRS
regulations also provide that significant changes in ownership
(greater than 50%) could result in the expiration of some of the
net operating loss carry forwards. As of the date of this report
the Company has not made an analysis of the changes in ownership to
determine if any of these losses have expired.
Net
income tax benefit is not recognized at this time because there is
no reasonable expectation that the benefit will be realized in the
future.
6.
CONVERTIBLE PREFERRED STOCK
At
December 31,, 2019 and 2018, the Company has 5,589,647 shares of
Series a Preferred Stock outstanding. Each share of Series A
Preferred Stock has a liquidation preference in the event of
liquidation of the Company of $0.001 per share before any payment
of distribution is made to the holders of common stock. Each Series
A Preferred share can be converted into common stock in the ration
of 15:1.
7.
COMMON STOCK
At
September 30, 2020 and December 31, 2019, the Company had
2,439,158,559 and 560,915,727 shares of common stock outstanding,
respectively. During the nine months ended September,30 2020,
1,878,242,832 shares of common stock were issued for the conversion
of $98,130 in convertible debentures and accrued
interest.
8.
OPERATING LEASE
The
Company has terminated all leases for office space as of December
31, 2019. The Company handles its executive functions from and
shares space with its CPA firm, CG Davis & Associates at 7833
Walker Drive in Greenbelt, MD 20770.
9.
STOCK BASED COMPENSATION
On
April 2, 2010 the Company adopted its 2010 Equity Incentive Plan.
Reserved for equity issuances under the Equity Incentive Plan are
50,000,000 shares of our common stock. During 2011 14,116,433
shares of common stock were issued under the provisions of the 2010
Equity Incentive Plan for which $92,065 of expenses were
recognized.
On
June 1, 2010 the Company adopted its 2010 Service Provider Stock
Compensation Plan. Reserved for equity issuances under the Service
Provider Stock Compensation Plan are 50,000,000 shares of our
common stock. No equity issuances were made during the reporting
period from the 2010 Service Provider Stock Compensation
Plan.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Stock
Options and Warrants
Certain
nonqualified stock options were issued during the period ended June
30, 2013 to a member of the board of directors as compensation for
services performed. These options expired unexercised during the
year ended December 31, 2018.
10.
RELATED PARTY TRANSACTIONS
Certain
stockholders have made cash advances to the Company to help with
short-term working capital needs. The net payments to stockholders
with unstructured payment plans amounted to $3,000 and $16,269 for
the periods ended September 30, 2020 and December 31, 2019,
respectively. The total balance due on unstructured loans from
stockholders amounted to $263,512 at September 30, 2020 and
$266,512 at December 31, 2019, respectively. Loans from
stockholders made with repayment terms are described in Note 4
above.
11.
ISSUABLE COMMON STOCK
As of
December 31, 2019 45,740,000 shares of the authorized shares,
amounting to $20,500 had not been issued. As of September 30, 2020
an additional subscription was issued authorizing another
60,000,000 shares for $10,000.
On
June 5, 2020, the Company subscribed 10,000,000 shares of common
stock and issued options to purchase 25,000,000 shares of the
Company’s common stock in order to acquire the a domain name and
toll free numbers to distribute CBD based products. The Company
recorded the acquisition at the fair value of the shares to be
issued and options issued of $23,715. Estimated amortization
expense over the next three years is as follows:
| 1 |
|
$ |
7,905 |
|
| 2 |
|
|
7,905 |
|
| 3 |
|
|
7,905 |
|
| |
|
$ |
23,715 |
|
During
the nine months ended September 30, 2020, the Company recognized
$2,635 in amortization expense.
12.
CONTINGENT LIABILITY
Effective
January 1, 2015 the Board of Directors authorized a new employment
contract with Gunther Than, CEO of View Systems, Inc. That
employment contract provides that in the event of a change in
control of the Board of Directors or a buyout or takeover or
substantial change of management structure Mr. Than will receive a
minimum of three year’s salary plus 4.8 million shares of
unrestricted stock or the equivalent in cash at Mr. Than’s
direction. With the change in management in 2019, $376,800 in
additional compensation to Mr. Than was accrued. Mr. Than’s current
base salary is $120,000 per annum.
Effective
July 1, 2019 the Board of Directors authorized a new employment
contract with John Campo to become CEO of View Systems, Inc. Mr.
Campo’s current base salary is $120,000 per annum.
13.
DERIVATIVE INSTRUMENT
The
Company has note payables with elements that qualify as a
derivative instrument. The note payable are convertible at the
lowest trading price during the previous 15-25 days ending on the
last trading day prior to notice. This variable conversion feature
requires bifurcation from the convertible debenture and measurement
at fair value.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The
derivative liability, as it relates to the instrument, is shown in
the following table:
| Fair Value, December
31, 2019 |
|
$ |
383,852 |
|
| |
|
|
|
|
| Change in value of
derivative liability |
|
|
438,691 |
|
| |
|
|
|
|
| Fair Value, September
30, 2020 |
|
$ |
822,543 |
|
The
derivative liability was valued using the Black-Scholes method with
the following inputs:
| Expected
life |
|
9 months |
|
| Stock price
volatility |
|
|
245 |
% |
| Annual risk-free
interest rate |
|
|
2.63 |
% |
| Expected
dividends |
|
|
None |
|
ASC
820, “Fair Value Measurements” and ASC 825, “Financial
Instruments”, requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring
fair value. It establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs
used to measure fair value. A financial instrument is categorized
within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. It
prioritizes the inputs into three levels that may be used to
measure fair value:
Level
1
Level
1 applies to assets or liabilities for which there are quoted
prices in active markets for identical assets or
liabilities.
Level
2
Level
2 applies to assets or liabilities for which there are inputs other
than quoted prices that are observable for the asset or liability
such as quoted prices for similar assets or liabilities in active
markets; quoted prices for identical assets or liabilities in
markets with insufficient volume or infrequent transactions (less
active markets); or model-derived valuations in which significant
inputs are observable or can be derived principally from, or
corroborated by, observable market data.
Level
3
Level
3 applies to assets or liabilities for which there are unobservable
inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or
liabilities.
Assets
and liabilities measured at fair value on a recurring basis were
presented on the Company’s consolidated balance sheet as of
September 30, 2020 and December 31, 2019 as follows:
| |
|
|
|
|
|
|
|
Fair Value
Measurements at September 30, 2020
Using Fair Value Hierarchy |
|
|
|
|
|
Description |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liability |
|
$ |
822,543 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
822,543 |
|
| Total |
|
$ |
822,543 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
822,543 |
|
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| |
|
|
|
|
|
|
|
Fair Value
Measurements at December 31, 2019 Using Fair Value
Hierarchy |
|
|
|
|
|
Description |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liability |
|
$ |
383,852 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
383,852 |
|
| Total |
|
$ |
383,852 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
383,852 |
|
14.
LICENSE AGREEMENT
In
August 2018, the Company executed a license agreement with IPVideo
Corporation (“IPVideo”) where the company licensed the View Scan
Concealed Weapons Detection System and all related hardware,
software, documentation and manufacturing detail to IPVideo.
IPVideo is required to pay $300 to the Company per View Scan unit
sold in IPVideo.
15.
MEMORANDUM OF UNDERSTANDING WITH SANNABIS
During
2019 the Company agreed to a Memorandum of Understanding to acquire
Sannabis S.A.S. and New Columbia Resources, Inc. The agreement
gives the company a First Right of Refusal to acquire both
companies upon satisfaction of certain conditions. The conditions
have not been me to date and the acquisition has not been
consummated. During the year ended December 31, 2019, the Company
invested $58,660 in developing this agreement, of which $38,660 was
for operating expenses and $20,000 was to acquire equipment and
supplies for use in this venture. During the period ended June 30,
2020 the Company invested an additional $37,956 for this purpose of
all of the investment was for operating expenses.
NOTE
16. SUBSEQUENT EVENTS
Subsequent
to September 30, 2020, the Company issued 1,056,056,337 shares of
common stock to convert convertible debentures and accrued
interest.
ITEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
EXECUTIVE
OVERVIEW
The
following analysis of our consolidated financial condition and
results of operations for the nine-month period ended September 30,
2020 and September 30, 2019 should be read in conjunction with the
Consolidated Financial Statements and other information presented
elsewhere in this quarterly report.
Overview
To
date, View Systems, Inc. has developed, produced and marketed
computer software and hardware systems for security and
surveillance applications. We expanded our product line in 2002 to
include a concealed weapons detection system we call ViewScan. In
2003 we added a hazardous material first response wireless video
transmitting system to our product line we refer to as Visual First
Responder. Unfortunately, the rising costs of manufacturing
equipment and the large quantities required to become cost
competitive has forced us to quit manufacturing our own
products.
Management
continues to provide parts and repair service work to our current
installations under our required mandate from the Department
Homeland Security.
Our
strategy going forward in 2021 is 1: to patent an enhanced and more
complex Weapons Detection Portal. 2: Create a subsidiary that
contains all security related technologies, patents, and expertise
to further capitalize in the security market with superior products
3: utilize the current View Systems public structure to initially
manage and promote Medicinal Cannabis related products as a
supplier of the raw materials.
The
company will divide its operations into manufacturing and promoting
security devices in one company and become an importer of raw
materials and finished product used in the Cannabis market space
for medical purposes in the current View Systems
operation.
The
two divisions will continue forward as independently operated
entities due to the very different nature of its products and
operations.
Products
and Services
Our
current products and services include:
ViewScan
Concealed Weapons Detection System
ViewScan,
which has also been sold under the name “Secure Scan”, is a
walk-through concealed weapons detector which uses magnetic data
sensing technology to accurately pinpoint the location, size and
number of concealed weapons. This walk-through portal is controlled
by a master processing board and a personal computer-based unit
which receives magnetic and video information and combines it in a
manner that allows the suspected locations of the concealed
weapon(s) to be displayed and stored electronically.
RESULTS
OF OPERATIONS
The
following discussions are based on our consolidated financial
statements, including our subsidiaries. These charts and
discussions summarize our financial statements for the three months
ended September 30, 2020 and 2019 and should be read in conjunction
with the financial statements, and notes thereto, included with our
most recent Form 10-K for fiscal year ended December 31,
2019.
SUMMARY
COMPARISON OF OPERATING RESULTS*
| |
|
Three months
ended September 30, |
|
| |
|
2020 |
|
|
2019 |
|
| Revenues, net |
|
$ |
0- |
|
|
$ |
0 |
|
| Cost of sales |
|
|
- |
|
|
|
- |
|
| Gross profit (loss) |
|
|
0- |
|
|
|
0 |
|
| Total operating expenses |
|
|
89,340 |
|
|
|
35,000 |
|
| Profit (Loss) from operations of
continuing operations |
|
|
(89,340 |
) |
|
|
(11,618 |
) |
| Total other income (expense) |
|
|
1,032,320 |
|
|
|
(74,370 |
) |
| Net income (loss) |
|
|
942,980 |
|
|
|
(109,370 |
) |
| Net income (loss) per share |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
Three
Month Period Ended September 30, 2020 Compared to Three Month
Period Ended September 30, 2019.
Our
net income for the three-month period ended September 30, 2020 for
continuing operations was $942,980 compared to a net loss of
($109,370) during the three-month period ended September 30, 2019
(an increase of $1,052,350 from net loss of ($109,370)of continuing
operations). We generated ($0) net revenues during the three-month
period ended September 30, 2020 similar to the three month period
ended September 30, 2019. Revenue is considered earned when service
is provided and in addition when the product is shipped to the
customer.
We
have experienced zero sales of our services and products which
resulted in zero revenues for the three month period ended
September 30, 2020 similar to the three month period ended
September 30, 2019. We believe the lack of revenue is the result of
a dearth of crops due to a lack of rain and an inability to pump
water where most needed. We intend to upgrade to an irrigation
system which will protect us from losing the crop due to lack of
moisture.
Cost
of service provided and the goods sold have been non-existent
resulting in zero profit for the three month period ended September
30, 2020 compared to zero gross profit for the three month period
ended September 30, 2019.
During
the three month period ended September 30, 2020, we incurred total
operating expenses of $89,340 compared to $35,000 incurred during
the three month period ended September 30, 2019 (an increase of
$54,340).
Operating
expenses incurred during the three-month period ended September 30,
2020 compared to the three month period ended September 30, 2019
increased primarily due to the increase in salaries in benefits of
the new President, John Campo, and workers required to work the
fields and manage the crops.
Our
net operating income for the continuing operations during the
three-month period ended September 30, 2020 was $942,980 compared
to a net operating loss of ($109,370) during the three-month period
ended September 30, 2019.
During
the three-month period ended September 30, 2020, interest expense
in the amount of ($38,640) (2019: ($36,307) was incurred. The
increase in interest expense was due to increased interest paid on
a loan.
During
the three-month period ended September 30, 2020, derivative expense
in the amount of ($1,070,960) (2019: $38,063) was incurred. The
increase in derivative expense was due to an increase of the
derivative liabilities and conversions during 2020.
After
deducting other expense, we realized a net income of $942,980 for
the three-month period ended September 30, 2020 compared to a net
loss of ($109,370) for the three-month period ended September 30,
2019 continuing operations.
The
weighted average number of shares outstanding was 1,972,681,668 for
the three-month period ended September 30, 2020 compared to
372,520,421 for the three-month period ended June 30,
2019
LIQUIDITY
AND CAPITAL RESOURCES
Nine
Month Period Ended September 30, 2020
As of
September 30, 2020, our current assets were $20,000 and our current
liabilities were $2,341,936. At September 30, 2020, our total
assets were comprised of $0 in cash, $20,000 in an investment in
Sannabis, a related company that the Company has a memorandum of
understanding to acquire and intangible assets of $21,080 for a
total assets of $41,080.
As of
September 30, 2020, current liabilities were comprised of: (i) $568
of a bank overdraft; (ii) $163,964 in accounts payable; (iii)
$134,237 in accrued payroll taxes payable; (iv) $672,115 in accrued
compensation; (v) $33,264 in accrued interest payable; (vi)
$263,512 in loans from stockholders; (vii) $251,733 in notes
payable; (viii) -0- in deferred revenue; (ix) and derivative
liability of $822,543.
Stockholders’
deficit increased from ($1,573,858) for fiscal year ended December
31, 2019 to ($2,300,856) for the nine-month period ended September
30, 2020.
Cash
Flows from Operating Activities
For
the nine-month period ended September 30, 2020, net cash flows used
in operating activities was ($82,294) compared to net cash flows
used in operating activities of ($102,637) for the nine-month
period ended September 30, 2019.
Cash
Flows from Investing Activities
For
the nine-month periods ended September 30, 2020 was (-0) and (-0-)
from September 30, 2019.
Cash
Flows from Financing Activities
We
have financed our operations primarily from debt or the issuance of
equity instruments. For the nine-month period ended September 30,
2020, net cash flows provided from financing activities was $81,460
compared to $103,073 for the nine-month period ended September 30,
2019. Cash flows from financing activities for the nine-month
period ended September 30, 2020 consisted of: (i) $22,000 in
proceeds from subscriptions for sales of common stock; and (ii)
$(3,000) net payments for stockholder loans; and (iii) $117,750 in
notes payable ; (iv) $55,858 was repaid on notes payable and $568
from a bank overdraft.
PLAN
OF OPERATION AND FUNDING
We
have incurred losses for the past two fiscal years and had a net
loss of $89,340 at September 30, 2020 and net loss of $35,000 for
continuing operations at September 30, 2019. Our revenues have been
non-existent and unable to cover our operating expenses. Our
auditors have expressed substantial doubt that we can continue as a
going concern.
The
Board has decided to separate the operation into one focusing on
further security products development and one to acquire a cannabis
growing and manufacturing of the medical marijuana products
business. We plan to separate the two product lines into two
separate companies to better focus on them individually.
Going
Concern
If
the market price of our common stock falls below the fixed price of
our registered stock offering, as in prior years we may again have
insufficient financing commitments in place to meet our expected
cash requirements for 2020 and 2021. We cannot assure you that we
will be able to obtain financing on favorable terms. If we cannot
obtain financing to fund our operations in 2020 and 20221, then we
may be required to reduce our expenses and scale back our
operations. These factors raise substantial doubt of our ability to
continue as a going concern. Footnote 2 to our financial statements
provides additional explanation of Management’s views on our status
as a going concern. The audited financial statements contained in
this Quarterly Report do not include any adjustments to reflect the
possible future effects on the recoverability of assets or the
amounts of liabilities that may result should we be unable to
continue as a going concern.
Our
independent registered accounting firm included an explanatory
paragraph in their reports on the accompanying financial statements
regarding concerns about our ability to continue as a going
concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this
disclosure by our independent auditors.
COMMITMENTS
AND CONTINGENT LIABILITIES
Our
total current liabilities increased to $2,341,936 at the nine-month
period ended September 30, 2020 compared to $1,594,693 at fiscal
year ended December 31, 2019. As of September 30, 2020, our short
and long term notes payable consist of the following:
We
are in default of the following Promissory notes:
REPLACE WITH THE NOTES PAYABLE SECTION FROM “NOTES
PAYABLE”
OFF
BALANCE SHEET ARRANGEMENTS
We do
not have any 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 investors.
CONTRACTUAL
OBLIGATIONS
As a
“smaller reporting company” as defined by Item 10 of Regulation
S-K, the Company is not required to provide this
information.
CRITICAL
ACCOUNTING POLICIES
In
all cases revenue is considered earned when the product is shipped
to the customer, installed (if necessary) and accepted by the
customer as a completed sale.
Going
Concern Opinion
You
should carefully consider the risks, uncertainties and other
factors identified below because they could materially and
adversely affect our business, financial condition, operating
results and prospects and could negatively affect the market price
of our Common Stock. Also, you should be aware that the risks and
uncertainties described below are not the only ones facing us.
Additional risks and uncertainties that we do not yet know of, or
that we currently believe are immaterial, may also impair our
business operations and financial results. Our business, financial
condition or results of operations could be harmed by any of these
risks. The trading price of our Common Stock could decline due to
any of these risks, and you may lose all or part of your
investment. In assessing these risks you should also refer to the
information contained in or incorporated by reference to our Form
10-K for the year ended December 31, 2019, including our financial
statements and the related notes thereto.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
As a
“smaller reporting company” as defined by Item 10 of Regulation
S-K, the Company is not required to provide information required by
this Item.
ITEM 4. CONTROLS AND
PROCEDURES
Evaluation
of Disclosure Controls and Procedures
We
have carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive
Officer/Principal Financial Officer, of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) as of June 30, 2020. Based on such
evaluation, we have concluded that, as of such date, our disclosure
controls and procedures were effective to ensure that information
required to be disclosed by us in our Exchange Act reports is
recorded, processed, summarized and reported within the time
periods specified in applicable SEC rules and forms, and that such
information is accumulated and communicated to our management,
including our Chief Executive Officer/Principal Financial Officer,
as appropriate, to allow timely discussions regarding required
disclosure.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining internal
control over our financial reporting. Our internal control system
was designed 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. Internal control over our financial
reporting includes those policies and procedures that:
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(1) |
pertain
to the maintenance of records that in reasonable detail accurately
and fairy reflect our transactions. |
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(2) |
provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles, and that our receipts and
expenditures are being made only in accordance with authorization
of our management and directors; and |
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(3) |
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on our financial
statements. |
All
internal control systems, no matter how well designed, have
inherent limitations, including the possibility of human error or
circumvention through collusion of improper overriding of controls.
Therefore, even those internal control systems determined to be
effective can provide only reasonable assurance with respect to
financial statement preparation. Further, because of changes in
conditions, the effectiveness of internal control may vary over
time.
Our
management assessed the effectiveness of our internal control over
financial reporting as of June 30, 2020. In making its assessment
of internal control over financial reporting, management used the
criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSD) in Internal-Control-Integrated
Framework and implemented a process to monitor and assess both
the design and operating effectiveness of our internal controls.
Based on this assessment, management believes that as of SEPTEMBER
30, 2020, our internal control over financial reporting was
effective.
This
quarterly report does not include an attestation report of our
registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to
attestation by our registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that
permit us to provide only management’s report in this quarterly
report.
Changes
in Internal Control Over Financial Reporting
Our
management has evaluated, with the participation of our Chief
Executive Officer/Chief Financial Officer, changes in our internal
controls over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) during the period ended June 30, 2020. In
connection with such evaluation, there have been no changes to our
internal control over financial reporting that occurred since the
beginning of our six-month period ended June 30, 2020 that have
materially affected, or are reasonably likely to materially affect
our internal control over financial reporting.
PART II – OTHER
INFORMATION
ITEM 1. LEGAL
PROCEEDINGS
None
ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
None.
ITEM 4. MINE SAFETY
DISCLOSURES
N/A.
ITEM 5. OTHER
INFORMATION
None.
ITEM 6. EXHIBITS
The
following exhibits are filed as part of this Form 10-Q:
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10.1 |
View
Systems, Inc. 2010 Equity Incentive Plan (Incorporated by reference
to exhibit 10.1 to Form 10-Q filed May 14, 2010) |
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10.2 |
View
Systems, Inc. 2010 Service Provider Stock Compensation Plan
(Incorporated by reference to exhibit 10.4 to Form 10-Q filed
August 19, 2010) |
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10.3 |
Employment
agreement between View Systems and Gunther Than, dated December 1,
2009 (Incorporated by reference to exhibit 10.1 to Form 8-K, filed
January 11, 2010) |
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10.4 |
Subcontractor
Agreement dated March 9, 2009 between MasTec North America, Inc.
and View Systems, Inc. (Incorporated by reference to exhibit 10.3
for Form 10-Q, Amendment No. 1, for the period ended March 31,
2009) |
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10.3 |
Purchase
Agreement, dated June 1, 2012 (Incorporated by reference to exhibit
10.1 to Form 8-K, filed July 3, 2012) |
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10.4 |
Amendment
to Purchase Agreement, dated June 28, 2012 (Incorporated by
reference to exhibit 10.2 to Form 8-K, filed July 3,
2012) |
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31.1 |
Rule
13a-15(e)/15d-15(e) Certification by the Chief Executive Officer
and Chief Financial Officer * |
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32.1 |
Certification
by the Chief Executive Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 * |
SIGNATURES
Pursuant
to the requirements 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.
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VIEW
SYSTEMS, INC. |
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| Date:
December 17, 2020 |
By: |
/s/
John Campo |
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John
Campo |
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Chief
Executive Officer
(Principal
executive officer, principal financial officer, and principal
accounting officer)
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