UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-30178
VIEW SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 59-2928366
(State of incorporation) (I.R.S. Employer Identification No.)
1550 Caton Center Drive, Suite E, Baltimore, Maryland 21227
(Address of principal executive offices)
Issuer's telephone number: (410) 242-8439
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of July 27, 2005, View Systems, Inc. had 81,530,422 shares of common stock
outstanding.
Transitional small business disclosure format: Yes [ ] No [X]
Explanatory Note
On October 12, 2005 we filed a registration statement on Form SB-2, and the
Securities and Exchange Commission ("SEC") conducted a full review of the Form
SB-2. The SEC requested that we expand the disclosures in this Form 10-QSB to
comply with its comments. As a result of this review we have restated our
financial statements for the year ended December 31, 2004. See the
"Restatement" note to the financial statements for the explanation of the
restatement. The disclosures in this report are as of the initial filing date
of August 15, 2005 and do not include subsequent events.
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements...............................................2
Item 2. Management's Discussion and Analysis or Plan of Operation..........8
Item 3. Controls and Procedures...........................................13
PART II: OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.......13
Item 6. Exhibits..........................................................14
Signatures ................................................................15
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial information set forth below with respect to our statements of
operations for the three and six month periods ended June 30, 2005 and 2004 is
unaudited and has been restated. This financial information, in the opinion
of management, includes all adjustments consisting of normal recurring entries
necessary for the fair presentation of such data. The results of operations
for the three month period ended June 30, 2005 are not necessarily indicative
of results to be expected for any subsequent period.
2
View Systems, Inc. and Subsidiaries
Consolidated Balance Sheets
ASSETS
------
June 30, December 31,
2005 2004
--------------- --------------
(Restated) (Restated)
Current Assets
Cash $ 93,269 $ 173,486
Accounts Receivable (Net of allowance
of $20,054 at December 31, 2004) 13,972 108,342
Inventory 26,197 61,197
--------------- --------------
Total current assets 133,438 343,025
--------------- --------------
Property & Equipment (Net) 9,518 14,803
--------------- --------------
Other Assets
Licenses 1,626,854 1,626,854
Due from Affiliates 103,358 98,457
Deposits 2,319 2,319
--------------- --------------
Total Other Assets 1,732,531 1,727,630
--------------- --------------
Total Assets $ 1,875,487 $ 2,085,458
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
Current Liabilities
Accounts Payable $ 81,877 $ 265,776
Accrued Expenses 30,802 100,548
Accrued Interest 71,400 66,000
Notes Payable 148,500 148,500
--------------- --------------
Total Current Liabilities 332,579 580,824
--------------- --------------
Stockholders' Equity
Preferred Stock, Authorized 10,000,000 Shares,
$.01 Par Value, Issued and Outstanding - -
Common Stock, Authorized 100,000,000 Shares,
$0.001 Par Value, Issued and Outstanding
81,509,422 81,510 -
Issued and Outstanding 76,533,922 - 76,534
Additional Paid in Capital 17,337,271 17,119,596
Retained Earnings (Deficit) (15,875,873) (15,691,496)
--------------- --------------
Total Stockholders' Equity 1,542,908 1,504,634
--------------- --------------
Total Liabilities and Stockholders' Equity $ 1,875,487 $ 2,085,458
=============== ==============
The accompanying notes are an integral part of these
consolidated financial statements.
3
View Systems, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
Revenues, Net $ 195,914 $ 158,041 $ 481,556 $ 192,394
Cost of Sales 125,180 73,872 229,508 106,198
------------- ------------- ------------- -------------
Gross Profit (Loss) 70,734 84,169 252,048 86,196
------------- ------------- ------------- -------------
Operating Expenses
Business development 17,617 - 32,646 -
General & Administrative 25,238 325,100 94,020 380,678
Professional Fees 31,341 57,955 69,856 82,174
Salaries and Benefits 148,812 106,639 234,365 240,210
------------- ------------- ------------- -------------
Total operating expenses 223,008 489,694 430,887 703,062
------------- ------------- ------------- -------------
Net Operating Income (Loss) (152,274) (405,525) (178,839) (616,866)
------------- ------------- ------------- -------------
Other Income (Expense)
Interest Expense (5,538) (25,297) (5,538) (28,311)
------------- ------------- ------------- -------------
Total Other Income (Expense) (5,538) (25,297) (5,538) (28,311)
------------- ------------- ------------- -------------
Net Income (Loss) $ (157,812) $ (430,822) $ (184,377) $ (645,177)
============= ============= ============= =============
Net Income (Loss) Per Share $ (0.00) $ (0.01) $ (0.00) $ (0.01)
============= ============= ============= =============
Weighted Average Shares
Outstanding 76,866,047 64,523,490 76,866,047 63,671,982
============= ============= ============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
4
View Systems, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
Additional Retained
Preferred Stock Common Stock Paid-in Earnings
Shares Amount Shares Amount Capital (Deficit)
----------- ---------- ------------- -------------- ------------- -------------
Balance, December 31, 2004 - $ - 76,533,922 $ 76,534 $ 17,119,596 $(15,691,496)
January - March 2005 -
shares issued for cash - - 155,000 155 15,345 -
January - March 2005 -
shares issued in payment
of accounts payable - - 128,000 128 18,872 -
April - June 2005 - shares
issued for cash - - 2,287,500 2,288 114,712 -
April - June 2005 - shares
issued for services - - 2,405,000 2,405 68,745 -
Net loss for the period
ended June 30, 2005 - - - - - (184,377)
----------- ---------- ------------- -------------- ------------- -------------
Balance, June 30, 2005
(unaudited) - $ - 81,509,422 $ 81,510 $ 17,337,270 $(15,875,873)
=========== =========== ============ ============== ============= =============
The accompanying notes are an integral part of these consolidated financial statements.
5
View Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended
June 30,
---------------------------
2005 2004
------------- --------------
(Restated)
Cash Flows from Operating Activities:
Net Income (Loss) $ (184,377) $ (645,177)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operations:
Depreciation and Amortization 6,400 17,490
Stock Issued for Services 71,150 239,380
Changes in Operating Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable 94,370 (14,764)
Inventory 35,000 -
Increase (Decrease) in:
Accounts Payable (164,898) (168,514)
Accrued Expenses (64,346) 32,507
------------- --------------
Net Cash Used by Operating Activities (206,701) (539,078)
------------- --------------
Cash Flows from Investing Activities:
Purchases of Equipment (1,115) -
Funds Advanced (to) from Affiliated Entities (4,901) -
------------- --------------
Net Cash Used in Investing Activities (6,016) -
------------- --------------
Cash Flows from Financing Activities:
Funds Advanced (to) from Stockholders - 491,685
Proceeds from Stock Issuance 132,500 47,000
------------- --------------
Net Cash Provided by Financing Activities 132,500 538,685
------------- --------------
Increase (Decrease) in Cash (80,217) (393)
Cash and Cash Equivalents at Beginning of Period 173,486 19,899
------------- --------------
Cash and Cash Equivalents at End of Period $ 93,269 $ 19,506
============= ==============
Cash Paid For:
Interest $ 138 $ -
Income Taxes $ - $ -
Non-Cash Activities:
Stock Issued in Payment of Accounts Payable $ 19,000 $ -
Stock Issued for Notes Payable and Accrued Interest $ - $ 522,105
Stock Issued for Services $ - $ 239,380
The accompanying notes are an integral part of these
consolidated financial statements.
6
View Systems, Inc.
Notes to the Consolidated Financial Statements
June 30, 2005
GENERAL
View Systems, Inc. (the Company) has elected to omit substantially all
footnotes to the financial statements for the six months ended June 30, 2005
since there have been no material changes (other than indicated in other
footnotes) to the information previously reported by the Company in their
Annual Report filed on the Form 10-KSB for the twelve months ended December
31, 2004.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all adjustments
which are, in the opinion of management, necessary to properly reflect the
results of the interim period presented. The information presented is not
necessarily indicative of the results from operations expected for the full
fiscal year.
RESTATEMENT
Pursuant to a regulatory review, the financial statements for the year ended
December 31, 2004 have been changed. During 2004, the Company's President
loaned funds to the Company to meet its financial needs, however, a payment
back to Mr. Than was incorrectly recorded as a loan receivable to Mr. Than,
leaving a receivable and payable in the same amount. This officer receivable
has been offset against accounts payable and notes payable and when combined,
Mr. Than had an identical balance. The restatement caused a decrease in
loans to shareholder of $66,500, leaving a $0 balance, and caused a decrease
in accounts payable of $66,000 and a decrease in notes payable of $500. This
change carried forward to 2005 and as a result the loans to shareholder
decreased $62,000, once again leaving a $0 balance, and caused a decrease in
accounts payable of $61,500 and a decrease in notes payable of $500. The
restatement also required a change to the 2005 cashflow statement by removing
funds received from a shareholder and including it in the accounts payable
section.
7
In this report references to "View Systems," "we," "us," and "our" refer to
View Systems, Inc. and its subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The SEC encourages companies to disclose forward-looking information so that
investors can better understand future prospects and make informed investment
decisions. This report contains these types of statements. Words such as
"may," "will," "expect," "believe," "anticipate," "estimate," "project," or
"continue" or comparable terminology used in connection with any discussion of
future operating results or financial performance identify forward-looking
statements. You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this report.
All forward-looking statements reflect our present expectation of future
events and are subject to a number of important factors and uncertainties that
could cause actual results to differ materially from those described in the
forward-looking statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
EXECUTIVE OVERVIEW
View Systems, Inc. develops, produces and markets computer software and
hardware systems for security and surveillance applications. Our principal
products include:
.. Visual First Responder - a lightweight, wireless camera system housed
in a tough, waterproof flashlight body.
.. SecureScan Concealed Weapons Detection System - a walk-through
concealed weapons detector which uses sensing technology and artificial
intelligence algorithms to accurately pinpoint the location, size and
number of concealed weapons.
.. ViewMaxx Digitial Video products - a high-resolution, digital video
recording and real-time monitoring system.
.. Biometric verification systems, magnetic door locks and central
monitoring or video command centers which can be combined with our
principal products.
Our revenues for the past two years have been from sales of our products.
Management believes that heightened attention to terrorism and other security
threats, and spending by the United States government on Homeland Security
will continue to drive growth in the market for security products.
During 2005 we have continued to provide live demonstrations of our SecureScan
product at sporting and entertainment venues, expos, and at state corrections
facilities. We also have provided demonstrations of our Visual First
Responder for police and civil support teams. These demonstrations have
raised interest in our products and resulted in increased orders of our
products.
During the last nine months we have contracted with the University of Northern
Florida to design new sensor boards for the SecureScan product which has
allowed us to reduce the installed sensor cost by a factor of four. The new
lower costs allow us to offer price points to the market which compete
directly with traditional metal detectors. We feel the new reduced price
points and enhanced interface abilities will allow us to be more competitive,
along with the advantages of three to four times the throughput rate,
non-contact imaging and permanent visual storage, and a log of all individuals
scanned.
In August 2005 we contracted with Inter-Connect Electronics, Inc. to
manufacture and assemble our Visual First Responder units. We have also
contracted with Sports Field Specialties, LLC, an experienced manufacturer, to
build the SecureScan line. These manufacturing agreements will allow us to
clear our current backlog for our product lines and reduce our labor cost.
Our backlog as of the end of July is in excess of $500,000 in orders and
contracts.
For the next twelve months our primary challenge will be to more fully develop
our sales and distribution network for the United States. We continue to
establish new partnerships, add active resellers and dealers. We intend to
8
build a United States domestic network of manufacturing representatives and
dealers for the sale and distribution of our products within the 48 states.
Our emphasis has been on marketing and sales programs through dealer channels,
plus internal marketing support for our products. We train our dealers and
support the dealer network by collaborating at customer demonstrations.
However, we cannot assure you that we will be able to develop these sales and
distribution channels to a level which will result in increased revenues or
continued profitability.
LIQUIDITY AND CAPITAL RESOURCES
We rely on private financing and revenues to fund our operations. We have
incurred losses for the past two fiscal years and had a net loss of $184,377
for the six month period ended June 30, 2005. Our auditors have expressed
substantial doubt that we can continue as a going concern based on these
operating losses. Management believes we will incur operating losses for the
near future while we continue to develop our sales and marketing channels.
Management continues to seek additional funding to develop our business
operations for the next twelve months. However, we can not assure you that we
will be successful at obtaining the necessary funding to continue this
development.
While our revenues are increasing, we are unable to satisfy our operating
expenses. Net cash used by operating activities was $206,701 for the six month
period ended June 30, 2005 (the "2005 six month period") compared to $539,078
for the six month period ended June 30, 2004 (the "2004 six month period").
However, operating expenses for the three month period ended June 30, 2005
(the "2005 second quarter) were less than half of the 2004 comparable period.
Net cash provided by financing activities for the 2004 six month period was
$538,685, with $491,685 of that amount related to funds advanced by
stockholders and proceeds of $47,000 from the sale of our common stock. Net
cash provided by financing activities for the 2005 six month period was
$132,500, primarily proceeds from sales of common stock.
We estimate that we will require additional financing of approximately
$500,000 to meet our needs for the next six months; however we do not have
commitments for financing. For the short term, management believes that
revenues and private financing will provide funds for operations and further
development of our business plan. For the long term, management expects that
the development of our sales and distribution channels will increase our
revenues; however, we will need to continue to raise additional funds through
loans and sales of our common stock, as needed.
Management believes that it will be essential to continue to raise additional
capital, both internally and externally, to compete in our markets. We cannot
assure you that we will be able to obtain financing on favorable terms and we
may be required to further reduce expenses and scale back our operations.
COMMITMENTS AND CONTINGENT LIABILITIES
Our base rent for operating leases related to our principal office and
manufacturing facility is approximately $2,300 per month, with an annual rent
escalator of 3%. At December 31, 2004, future minimum payments for operating
leases related to our office and manufacturing facility were $19,964 through
2006.
Our total current liabilities were $332,579 at June 30, 2005 and included
accounts payable of $81,877, accrued expenses of $30,802, accrued interest of
$71,400 and notes payable of $148,500.
OFF-BALANCE SHEET ARRANGEMENTS
None.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United
9
States of America requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and
accompanying notes. Estimates of particular significance in our financial
statements include annual tests for impairment of our licenses. These
estimates could be materially different if we used a different set of
standards than those described below. Also, events beyond our control, such
as changes in government regulations that may affect the usefulness of our
licenses or the introduction of new technologies that compete directly with
our technologies may affect the value of our licenses.
We first determine the value of the license using a projected cash-flow
analysis to determine the present value of cash flows. The test is done using
assumptions as to various scenarios of increases and decreases in the revenue
stream and applying a discount rate of 6%. If the value achieved under these
various methods is less than the carrying value of the assets then it is
considered that an impairment has occurred and the asset's carrying value is
adjusted to reflect the impairment.
Management also makes estimates on the useful life of our licenses based on
the following criteria:
.. Whether other assets or group of assets are related to the useful life
of the licenses,
.. Whether any legal, regulatory or contractual provisions will limit the
use of the assets,
.. We evaluate the cost of maintaining the license,
.. We consider the possible effects of obsolescence, and
.. Whether there is maintenance or any other costs associated with the
license.
RESULTS OF OPERATIONS
The following discussions are based on the unaudited consolidated financial
statements of View Systems and its subsidiaries. These charts and discussions
summarize our financial statements for the three and six month periods ended
June 30, 2004 and 2005 and should be read in conjunction with the financial
statements, and notes thereto, included in Part I, Item 1, above.
Summary Comparison of Three and Six Month Period Operations
---------------------------------------------------------------
Six month Six month Three month Three month
period ended period ended period ended period ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
-------------- ------------- --------------- -------------
Revenues, net $ 481,556 $ 192,394 $ 195,914 $ 158,041
Cost of sales 229,508 106,198 125,180 73,872
Gross profit 252,048 86,196 70,734 84,169
Total operating
expenses 430,887 703,062 223,008 489,694
Total other income
(expense) (5,538) (28,311) (5,538) (25,297)
Net income (loss) (184,377) (645,177) (157,812) (430,822)
Net earnings (loss)
per share $ (0.00) $ (0.01) $ (0.00) $ (0.01)
Revenue is considered earned when the product is shipped to the customer. The
concealed weapons system and the digital video system each require
installation and training. Training is a revenue source separate and apart
from the sale of the product. In those cases revenue is recognized at the
completion of the installation and training. Revenues for the 2005 six month
period increased 150.2% compared to the 2004 six month period due to increased
sales of our SecureScan and Visual First Responder products. Revenues for the
three month period ended June 30, 2005 (the "2005 second quarter") increased
24.0% compared to the three month period ended June 30, 2004 (the "2004 second
quarter"). The breakdown of revenues by product line follows:
10
Six month period Six month period
June 30, 2005 June 30, 2004
----------------- ----------------
Secure Scan $ 221,970 $ -
ViewMaxx 38,017 121,246
Visual First Responder 219,691 69,000
Service 1,878 2,148
Our backlog at July 31, 2005, was approximately $500,000. The delay between
the time of a purchase order and shipping of the product results in a delay of
recognition of the revenue from the sale. This delay in recognition of
revenue will continue as part of our results of operations.
Costs of sales increased 116.0% for the 2005 six month period compared to the
2004 six month period and increased 69.4% for the 2005 second quarter compared
to the 2004 second quarter. Cost of sales increased in the 2005 periods as a
result of the expenses related to expanding our sales and distribution
channels including the cost of products for demonstrations, travel to shows
and increased dealer relations, and promotional materials. Management
anticipates that cost of sales will increase as our marketing efforts
continue, but that the relative margins of each product line should remain
relatively the same.
As a result of increased revenues in the 2005 six month period our gross
profit increased 192.4% compared to the 2004 six month period. Due to
increased cost of sales, gross profit decreased 16.0% for the 2005 second
quarter compared to 2004 second quarter
For the 2005 six month period total operating expense decreased 54.6% compared
to the 2004 six month period. For the 2005 second quarter total operating
expense decreased 38.7% compared to the 2004 second quarter. The decreases in
the 2005 periods were primarily a result of an approximately $300,000 decrease
in general and administrative expense related to common shares issued for
services in the 2004 second quarter. Business development expenses of $17,617
were recorded for the 2005 second quarter and $32,646 for the 2005 six month
period where we did not record any of those expenses in the comparable 2004
period. Management anticipates that business development expenses will
continue at present levels as we move forward with our business plan.
Total other expense is related to interest on loans and decreased in the 2005
periods as a result of a reduction in debt. Interest expense will likely
increase if we obtain debt financing to provide the additional $500,000 we
will need for operations during the next twelve months.
As a result of the above, our net loss decreased 63.4% for the 2005 six month
period compared to the 2004 six month period and decreased 71.4% for the 2005
second quarter compared to the 2004 second quarter. Management anticipates
that our net loss will continue to decrease as we improve our sales channels.
The following chart summarizes our balance sheet at June 30, 2005 and December
31, 2004
Summary Balance Sheet
---------------------
For six month
period ended For the year ended
June 30, 2005 December 31, 2004
---------------- ------------------
Cash and cash equivalents $ 93,269 $ 173,486
Total current assets 133,438 343,025
Total assets 1,875,487 2,085,458
Total current liabilities 332,579 580,824
11
Retained earnings (Deficit) (15,875,873) (15,691,496)
Total stockholders equity $ 1,542,908 $ 1,504,634
Our total assets decreased at June 30, 2005, primarily as a result of
decreases in our cash, accounts receivable, inventory and property and
equipment. Total current liabilities decreased primarily due to decreases in
accounts payable and accrued expenses.
FACTORS AFFECTING FUTURE PERFORMANCE
Our independent auditors have expressed concern whether we can continue
as a going concern.
We have incurred ongoing operating losses and do not currently have financing
commitments in place to meet expected cash requirements for the next twelve
months. We are unable to fund our day-to-day operations through revenues
alone and management believes we will incur operating losses for the near
future while we seek financing commitments during the next twelve months to
fund further development of our business plan. While we have expanded our
product line and established new sales channels, we may be unable to increase
revenues to the point that we attain and are able to maintain profitability.
We are currently dependent on the efforts of our resellers for our
continued growth and must expand our sales channels to increase our
revenues.
We are in the process of developing and expanding our sales channels, but we
expect overall sales to remain down as we develop our marketing activities.
If we are unsuccessful in developing sales channels then we may have to scale
down our business plan. We are actively recruiting and adding other
additional resellers and dealer and must continue to find other methods of
distribution to increase customers.
We may not be able to compete successfully in our market because we have
a small market share and compete with large national and international
companies.
We estimate that we have less than a 1% market share of the surveillance and
weapons detection market. We compete with many companies that have greater
brand name recognition and significantly greater financial, technical,
marketing, and managerial resources. The position of these competitors in the
market may prevent us from capturing more market share. We intend to remain
competitive by increasing our existing business through marketing efforts,
selectively acquiring complementary technologies or businesses and services,
and increasing our efficiency and reducing costs.
Our revenues are dependent in part upon our relationships and alliances
with government agencies and partners.
While we own exclusive licenses for the SecureScan technology, we are
dependent upon the continuation of the ongoing contract between the Department
of Energy and National Institute of Justice for continuations and improvements
to the concealed weapons detection technology. We are also dependent upon the
U.S. Department of Energy's Idaho National Engineering and Environmental
Laboratory for further development of the Visual First Responder product. If
either of these entities should discontinue its operations or research and
development we may lose our competitive edge in our markets.
We must successfully introduce new or enhanced products and manage the
costs associated with producing several product lines to be successful.
Our future success depends on our ability to continue to improve our existing
products and to develop new products using the latest technology that can
satisfy customer needs. However, we cannot be certain that we will be
successful at producing multiple product lines and we may find that the cost
of production of multiple product lines inhibits our
12
ability to maintain or improve our gross profit margins. In addition, the
failure of our products to gain or maintain market acceptance or our failure
to successfully manage our cost of production could adversely affect our
financial condition.
We would be harmed if we were unable to use our manufacturing facility.
We assemble and manufacture a portion of our products at our facility located
in Baltimore, Maryland. If we were unable to continue manufacturing at this
location due to fire, prolonged power shortage or other natural disaster, then
we would be unable to supply products to our customers.
ITEM 3. CONTROLS AND PROCEDURES
Our Chief Executive Officer, who also acts in the capacity of principal
financial officer, evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report. Based on that
evaluation, he concluded that our disclosure controls and procedures were
effective.
Also, our Chief Executive Officer determined that there were no changes made
in our internal controls over financial reporting during the second quarter of
2005 that have materially affected, or are reasonably likely to materially
affect our internal control over financial reporting.
PART II: OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Sale of Unregistered Securities
The following discussion describes securities sold by View Systems without
registration through August 3, 2005 that have not been previously reported.
On August 3, 2005, we issued 90,000 shares to William Jordan in consideration
for services rendered to us. We relied on an exemption from registration for
a private transaction not involving a public distribution provided by Section
4(2) of the Securities Act.
On July 27, 2005, we issued 100,000 shares to Will Stamp for $10,000. We
relied on an exemption from registration for a private transaction not
involving a public distribution provided by Section 4(2) of the Securities
Act.
On July 18, 2005, we issued 200,000 shares to Jeffrey McIntosh for $10,000.
We relied on an exemption from registration for a private transaction not
involving a public distribution provided by Section 4(2) of the Securities
Act.
On June 21, 2005, we issued 522,000 shares of common stock to Martin J.
Maassen for advances to the company of $52,000. We issued 230,000 shares of
common stock to Michael L. Bagnoli for direct investments to the company of
$11,000 and director services rendered to the company. We relied on an
exemption from registration for a private transaction not involving a public
distribution provided by Section 4(2) of the Securities Act.
On June 15, 2005, we issued 7,171,725 shares of Series A Preferred Stock to
Gunther Than in consideration for conversion of notes payable of $48,000 and
services rendered to the company valued at $23,717. We relied on an
exemption from registration for a private transaction not involving a public
distribution provided by Section 4(2) of the Securities Act.
On May 11, 2005, we issued 200,000 shares of common stock to Jeffrey B.
McIntosh for $10,000. We relied on an exemption from registration for a
private transaction not involving a public distribution provided by Section
4(2) of
13
the Securities Act.
On May 3, 2005, we issued 2,000,000 shares of common stock to Scott Clark for
$100,000. We relied on an exemption from registration for a private
transaction not involving a public distribution provided by Section 4(2) of
the Securities Act.
On April 6, 2005, we issued 87,500 shares of common stock to William H. Zuhone
for $7,000. We relied on an exemption from registration for a private
transaction not involving a public distribution provided by Section 4(2) of
the Securities Act.
On March 9, 2005, we issued 200,000 shares of common stock to Liem Nguyen in
consideration for a full and final release of his interest in the Milestone
technology. We relied on an exemption from registration for a private
transaction not involving a public distribution provided by Section 4(2) of
the Securities Act.
ITEM 6. EXHIBITS
Part I Exhibits
31.1 Chief Executive Officer Certification
31.2 Principal Financial Officer Certification
32.1 Section 1350 Certification
Part II Exhibits
3.1 Articles of Incorporation of View Systems, as amended (Incorporated
by reference to exhibit 3.1 to Form 10-QSB filed November 14, 2003)
3.2 By-Laws of View Systems (Incorporated by reference to exhibit 3.2 to
Form 10-QSB filed November 14, 2003)
10.1 Employment agreement between View Systems and Gunther Than, dated
January 1, 2003. (Incorporated by reference to exhibit 10.3 to Form
10-KSB, filed April 14, 2004)
21.1 Subsidiaries (Incorporated by reference to exhibit 21.1 to Form
10-KSB, filed March 31, 2003)
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
VIEW SYSTEMS, INC.
/s/ Gunther Than
Date: February 2, 2006 By: ______________________________________
Gunther Than
Chief Executive Officer, Treasurer,
Director and Principal Financial Officer
/s/ Michael L. Bagnoli
Date: February 2, 2006 By: ________________________________________
Michael L. Bagnoli
Secretary and Director
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