NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
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 2018, 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. (USPS.pk). It is intended for Dr. Massen to spent significant time continuing
that business for USPS.
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
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
1.
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue
Recognition”)
Effective
January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“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 Topics an adjustment to the opening balancer of equity at January 1, 2018.
Revenue
is recognized in accordance with the Accounting Standards Codification (“ASC”) Topic 606. The Company performs the
following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii)
determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize
revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet
the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is
entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined
to be within the scope of Topic 606, the Company evaluates the goods or services promised within each contract related performance obligation
and assesses whether each promised good or service is distinct. The Company recognizes as revenue the amount of the transaction
price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
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.
| |
Year Ended December 31, | |
| |
2020 | | |
2019 | |
Royalty Income | |
$ | 2,904 | | |
| | |
Extended Warranty | |
| | | |
$ | 1,400 | |
During
2020, the Company did not sell its’ products or installation and training, but rather only fulfilled extended warranties on its’
existing installed units. .During 2019, sales consisted of the sale of one demonstration unit and the fulfillment of extended warranties.
Under the new guidance, there is no change in our revenue recognition for extended warranties 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 method.
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 December 31, 2020 and 2019 $0.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
1.
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income
Taxes
Income
taxes are recorded under the asset and liability 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 operations in the period the rate change becomes effective. A
valuation allowance is recorded for the net deferred tax asset when it is more likely than not that such net
deferred tax asset will not be realized.
The
Company files income tax returns in the U.S. federal jurisdictions, and in various state jurisdictions. The Company policy is to recognize
interest and penalties 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,
as at December 31, 2019 and December 31, 2020 the Company have no Research and development cost.
Advertising
Advertising
costs are charged to operations as incurred. Advertising costs for the years ended December 31, 2020 and 2019 were $992 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 9in accordance with FASB ASC Topic 718. Share-based compensation cost
for stock options granted to employees, board members and service providers is determined at the grant date using Black – Scholes
model was used for fair value estimates. The value of the award that is ultimately expected to vest is recognized as expense on a
straight-line basis over the required vesting period.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
1.
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income
(Loss) Per Common Share
Basic
income (loss) per common share is computed by dividing net income (loss) available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted income per common share is computed by
dividing net income available to common stockholders by the weighted average number of common shares outstanding during the
period plus 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 does not include potential shares
of common stock equivalents, as their impact would be antidilutive. The following reconciles amounts reported in the financial statements:
| |
(Numerator) | | |
(Denominator) | | |
Amount | |
| |
| | |
| | |
| |
Period ended December 31, 2020 | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Loss from operations which is the amount that is available to common stockholders | |
$ | (1,112,802 | ) | |
| 1,693,086,344 | | |
$ | (0.00 | ) |
| |
| | | |
| | | |
| | |
Period ended December 31, 2019 | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Income from operations which is the amount that is available to common stockholders | |
$ | (1,238,976 | ) | |
| 390,579,210 | | |
$ | (0.00 | ) |
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
2.
GOING CONCERN
The
Company has incurred and continues to incur, losses from operations. For the years ended December 31, 2020 and 2019,
the Company incurred net losses of approximately $1,113,000 and $1,239,000, respectively. The Company also has a working capital deficiency of approximately $ __________ and a deficit
of approximately $ 31,144,000 at December 31, 2020. In addition, certain notes payable have come due and the note holders are demanding
payment. In addition, as described in Note 4, the Company is currently in default on a $50,000 loan from a stockholder. These
factors raise substantial doubt about the Company’s ability to continue as a going concern.
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 anticipates that these negotiations
will result in extended payment terms.
Historically,
the Company has financed its operations primarily through private financing. It is management’s intention to finance operations
during 2021 primarily through the sold of additional equity to finance additional work needed for compliance and operational
needs. 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 additional financing will be available or that any potential mergers
or acquisitions would be successful and the Company may be required to further reduce expenses and scale back operations.
The
consolidated financial statements 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 this uncertainty of 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 adoption of
this standard did not have a material impact on the Company’s financial position or results of operations as the Company did not have any leases as the Company uses shared office.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
4.
NOTES PAYABLE
Notes
payable as of December 31, 2020 and 2019 consists of the following:
| |
2020 | | |
2019 | |
| |
| | |
| |
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 12% per year dated January 24, 2018, convertible into the Company’s common stock at a
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 12% 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 | |
| 9,110 | | |
| 40,000 | |
| |
| | | |
| | |
Convertible
promissory note with interest as 12% per year dated August 19, 2019, convertible into the Company’s common stock at a
58% discount to the lowest trading price during 25 trading days immediately preceding conversion. The note was due August
19, 2020 | |
| - | | |
| 38,000 | |
| |
| | | |
| | |
Convertible
promissory note with interest as 12% per year dated October 8, 2019, convertible into the Company’s common stock at a
50% discount to the lowest trading price during 25 trading days immediately preceding conversion. The note was due October
20, 2020. | |
| - | | |
| 50,000 | |
| |
| | | |
| | |
Convertible
promissory note with interest as 12% 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 was due October 22, 2020 | |
| - | | |
| 53,000 | |
| |
| | | |
| | |
Convertible
promissory note with interest as 12% per year dated January 08, 2020, convertible into the Company’s common stock at
a 50% discount to the lowest trading price during 25 trading days immediately
preceding conversion. The note is due January 08, 2021 | |
| 112,750 | | |
| - | |
| |
| | | |
| | |
Convertible
promissory note with interest as 12% per year dated November 12,2020 convertible into the Company’s common stock at
a 50% discount to the lowest trading price during 25 trading days immediately
preceding conversion. The note is due November 12,2021 | |
| 50,000 | | |
| - | |
| |
| | | |
| | |
Convertible
promissory note with interest as 12% per year dated June 05, 2020 convertible into the Company’s common stock at
a 50% discount to the lowest trading price during 10 trading days immediately
preceding conversion. The note is due June 05,2021 | |
| 15,000 | | |
| | |
| |
| 236,860 | | |
| | |
Discount
on convertible notes | |
| (21,590 | ) | |
| | |
| |
| 215,270 | | |
| | |
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
5.
INCOME TAXES
The
Company uses the Liability method in the computation of the income tax expense and the Current and Deferred income taxes payable (deferred
tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to
the amount expected to be realized.
The
components of income tax expense (benefit) are as follows:
| |
Year Ended December 31, | |
| |
2020 | | |
2019 | |
Current taxes (benefit) | |
| | | |
| | |
Federal | |
$ | 233,700 | | |
$ | 259,200 | |
State | |
| 89,000 | | |
| 98,700 | |
Total taxes (benefit) | |
$ | (322,700 | ) | |
$ | (357,900 | ) |
| |
| | | |
| | |
| |
| Year
Ended December 31, | |
| |
2020 | | |
2019 | |
Loss before income taxes | |
$ | (1,112,802 | ) | |
$ | (1,234,476 | ) |
The
U.S. Federal statutory rate is reconciled to the effective tax rate as follows:
| |
Year Ended December 31, | |
| |
2020 | | |
2019 | |
U.S. Federal Statutory Rate | |
| 21 | % | |
| 21 | % |
State income taxes | |
| 8 | % | |
| 8 | % |
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.
The
Company has adopted accounting rules that prescribe when to recognize and how to measure the financial statement effects, if any, of
income tax positions taken or expected on its income tax returns. These new rules require management to evaluate the likelihood that,
upon examination by relevant taxing jurisdictions, those income tax positions would be sustained.
Based
on that evaluation, if it were more than fifty percent (50%) probable that a material amount of income tax would be imposed at the entity
level upon examination by the relevant taxing authorities, a liability would be recognized in the accompanying balance sheet along with
any interest and penalties that would result from that assessment. Should any such penalties and interest be incurred, the Company’s
policy would be to recognize them as operating expenses.
The
following is a reconciliation of the expected statutory federal income tax provision to the actual income tax benefit for the fiscal
years ended
December
31, 2020 and December 31, 2019:
| |
December 31, 2020 | | |
December 31, 2019 | |
Federal Statutory Rate | |
$ | (234,000 | ) | |
$ | (260,000 | ) |
Valuation Allowance | |
| 234,000 | | |
| 260,000 | |
| |
| - | | |
| - | |
For
the year ended December 31, 2020 and December 31, 2019, the expected tax benefit is calculated at statutory rate of 21%.
Significant
components of the Company’s deferred tax assets and liabilities were as follows for the fiscal year December 31, 2020 and December
31, 2019:
| |
December 31, 2020 | | |
December 31, 2019 | |
Deferred Tax Asset: | |
| | | |
| | |
Net Operating Loss Carry Forwards | |
$ | 8,534,000 | | |
$ | 8,300,000 | |
Total Deferred Tax Assets | |
| 8,534,000 | | |
| 8,300,000 | |
| |
| | | |
| | |
Deferred Tax Liabilities: | |
| | | |
| | |
Depreciation | |
| - | | |
| - | |
Deferred Revenue | |
| - | | |
| - | |
Total Deferred Tax Liabilities | |
| - | | |
| - | |
| |
| | | |
| | |
Net Deferred Tax Assets: | |
| 8,534,000 | | |
| 8,300,000 | |
Less Valuation Allowance | |
| (8,534,000 | ) | |
| (8,300,000 | ) |
Net Deferred Tax Assets (Liabilities) | |
$ | - | | |
$ | - | |
Due
to continuous losses from operations the Company has assigned a full valuation allowance against its deferred tax assets.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
6.
CONVERTIBLE PREFERRED STOCK
At
December 31, 2020 and 2019, 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
December 31, 2020 and 2019, the Company has 3,925,641,882 and 560,915,727 shares of Common Stock outstanding. During the year ended
December 31, 2020, 3,364,726,155 shares of common stock were issued for the conversion of $432,474 in convertible debentures and accrued
interest. During the year ended December 31, 2019, 232,210,201 shares of common stock were issued for the conversion of $408,503 in convertible
debentures and accrued interest.
8.
OPERATING LEASE
The
Company has terminated all leases for office space as of December 31, 2019. Now the Company handles all its executive functions
from a shared space.
9.
STOCK BASED COMPENSATION
On
April 2, 2010 the Company adopted its 2010 Equity Incentive Plan and reserved 50,000,000 shares of our common stock for
issuance. 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.
The
2010 EIP will be terminated in 2020 unless terminated earlier by the Board with the approval of Shareholders.
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. During the year ended December 31,2020 and December 31,2019 no stock
options granted. No equity issuances were made during the reporting period from the 2010 Service Provider Stock Compensation Plan. The
2010 SCP will be terminated in 2020 unless terminated earlier by the Board with the approval of Shareholders.
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
10.
RELATED PARTY TRANSACTIONS
Certain
stockholders have made cash advances to the Company to help with short-term working capital needs. These are interest free advances
and term and conditions are not settled. The net payments to stockholders with unstructured payment plans amounted to $3,000
and $0 for the periods ended December 31, 2020 and 2019, respectively. The total balance due on unstructured loans
from stockholders amounted to $263,512 at December 31, 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. During the year
ended December 31, 2020, an additional subscription was issued authorizing another 60,000,000 for $10,000. On June 05, 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 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, amortized in three years.
12.
CONTINGENT LIABILITY
Effective
January 1, 2015 the Board of Directors authorized a new employment contract with Gunther Than, CEO of View Systems, Inc. The 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 entered into 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 INSTRUMENTS
The
Company has convertible notes payable (See note 4) with elements that qualify as a derivative instrument. The notes
payable are convertible at the lowest trading price during the previous 10 to 25 days ending on the last trading day
prior to the notice of conversion. This variable conversion feature requires bifurcation from the convertible notes
and measurement at fair value.
The
derivative liability, as it relates to the instrument, is shown in the following table:
Beginning
balance, January 1, 2019 | |
$ | 244,004 | |
| |
| | |
Change
in value of derivative liability | |
| 139,848 | |
| |
| | |
Fair
Value, December 31, 2019 | |
| 383,852 | |
| |
| | |
Change
in value of derivative liability | |
| 252,162 | |
| |
| | |
Fair
Value, December 31, 2020 | |
$ | 636,014 | |
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
The
derivative liability was valued using the Black-Scholes method with the following inputs:
Expected
life | |
| 9
months | |
Stock
price volatility | |
| 199.33 | % |
Annual
risk-free interest rate | |
| 2.63 | % |
Expected
dividends | |
| None | |
14.
FAIR VALUE MEASUREMENTS
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 December
31, 2020 and 2019 as follows:
| |
Fair
Value Measurements at December 31, 2020
Using
Fair Value Hierarchy | |
Description | |
Total | | |
Level
1 | | |
Level
2 | | |
Level
3 | |
| |
| | |
| | |
| | |
| |
Derivative
liability | |
$ | 636,014 | | |
$ | - | | |
$ | - | | |
$ | 636,014 | |
Total | |
$ | 636,014 | | |
$ | - | | |
$ | - | | |
$ | 636,014 | |
|
|
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 | |
VIEW
SYSTEMS, INC. and SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
15. 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 details to IPVideo.
IPVideo is required to pay $300 to the Company per View Scan unit sold by IPVideo. The contract
is exclusive manufacturing without cancelation clause for the current View Scan model. Units were sold by IPVideo during 2020 amounting to $2,904 and none in 2019 under this license.
16. MEMORANDUM OF UNDERSTANDING WITH SANNABIS
During
2019, the Company entered into a Memorandum of Understanding to acquire Sannabis S.A.S. and New Columbia Resources, Inc. This
agreement gives the Company a First Right of Refusal to acquire both companies upon satisfaction of certain conditions. The conditions
have not been met to date and the acquisitions have thus not been consummated. During the year ended December 31, 2019, the Company
invested $58,660 in developing this agreement, of which $38,660 for operating expenses and $20,000 was to acquire equipment
and supplies for use in this venture.
17.
SUBSEQUENT EVENTS
Subsequent
to December 31, 2019, the Company issued 1,349,010,754 shares of common stock to convert convertible debentures and accrued interest.