EXECUTIVE OVERVIEW

The following analysis of our consolidated financial condition and results of operations for the three-month period ended March 31, 2020 and March 31, 2019 should be read in conjunction with the Consolidated Financial Statements and other information presented elsewhere in this quarterly report.





Overview

View Systems, Inc. has developed, produced and marketed computer software and hardware systems for security and surveillance applications. In 1998 digital video recorder technology was our first developed product and we enhanced this product line by developing interfaces with other various technologies, such as facial recognition, access control cards and control devices such as magnetic locks, alarms and other common security devices.

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.

In the short term, management continues to raise funds by providing parts and repair service work to our current installations.

Our strategy for remainder of 2020 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 internationally in one subsidiary and become an importer of raw materials used in the Cannabis market space for medical purposes in another subsidiary 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.





19







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 March 31, 2019 and March 31, 20187 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, 2018.





                    SUMMARY COMPARISON OF OPERATING RESULTS*



                                                           Three ended March 31,
                                                             2020           2019
Revenues, net                                            $          -     $     700
Cost of sales                                                       -             -
Gross profit (loss)                                                 -           700
Total operating expenses                                      107,209        25,753

Profit (Loss) from operations of continuing operations (107,209 ) (25,053 ) Total other income (expense)

                                 (477,663 )     (46,576 )
Loss from discontinued operations                                   -             -
Net income (loss)                                            (584,872 )     (71,629 )
Net income (loss) per share                              $      (0.00 )   $   (0.00 )

Three Month Period Ended March 31, 2020 Compared to Three Month Period Ended March 31, 2019.

Our net loss for the three-month period ended March 31, 2020 for continuing operations was ($584,872) compared to a net loss of ($71,629) during the three-month period ended March 31, 2019 (an increase in net loss of $513,243 of continuing operations). We generated ($0) net revenues during the three-month period ended March 31, 2020 compared to $700 during the three month period ended March 31, 2019(decrease in net revenue of $700). Revenue is considered earned when service is provided and in addition when the product is shipped to the customer.

We have experienced an decrease in sales of our services and products which resulted in a decrease of revenues for the three month period ended March 31, 2020 compared to the three month period ended March 31, 2019. We believe the decreased revenue is the result of licensing the technology of the current ViewScan to IPVideo a substantial security technology provider to manufacture and distribute the current ViewScan product. We also continue service our remaining install base of security products and we continue to receive purchase orders for the View Scan which we direct to IPVideo to quote, sell and service.





20

Cost of service provided and the goods sold have been non-existent resulting in zero profit for the three month period ended March 31, 2020 compared to a gross profit of $700 for the three month period ended March 31, 2019 which was a warranty payment.

During the three month period ended March 31, 2020, we incurred total operating expenses of $107,209 compared to $25,053 incurred during the three month period ended March 31, 2019 (an increase of $82,156).

Operating expenses incurred during the three month period ended March 31, 2020 compared to the three month period ended March 31, 2019 increased primarily due to the increase in salaries in benefits of the new (Chairman, President, CEO and Financial Officer) John Campo.

Our net operating loss for the continuing operations during the three-month period ended March 31, 2020 was ($584,872) compared to a net operating loss of ($71,629) during the three-month period ended March 31, 2019.

During the three-month period ended March 31, 2020, interest expense in the amount of ($112,357) (2019: ($18,948) was incurred. The increase in interest expense was due to increased interest paid on a loan.

During the three-month period ended March 31, 2020, derivative expense in the amount of ($365,306) (2019: 27,628) 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 loss of ($584,872) for the three month period ended March 31, 2020 compared to a net loss of ($71,629) for the three month period ended March 31, 2019 continuing operations.

The weighted average number of shares outstanding was 663,862,161 for the three month period ended March 31, 2020 compared to 368,520,421 for the three month period ended March 31, 2019.

LIQUIDITY AND CAPITAL RESOURCES

Three Month Period Ended March 31, 2018

As of March 31, 2019, our current assets were $20,000 and our current liabilities were $1,927,740. At the three month period ended March 31, 2020, current assets were comprised of: $20,000 in an investment in Sannabis, a related company that the Company has a memorandum of understanding to acquire.

As of March 31, 2020, current liabilities were comprised of: (i) $148,965 in accounts payable and accrued expenses; (ii) $552,115 in deferred compensation; (iii) $134,237 in accrued and withheld payroll taxes payable; (iv) $23,695 in accrued interest payable; (v) $263,512 in loans from stockholders; (vi) $178,866 in notes payable; (vii) -0- in deferred revenue; and derivative liability of $626,118.

Stockholders' deficit increased from ($1,573,858) for fiscal year ended December 31, 2019 to ($1,907,740) for the three month period ended March 31, 2020.

Cash Flows from Operating Activities

For the three month period ended March 31, 2020, net cash flows used in operating activities was ($59,959) compared to net cash flows used in operating activities of ($36,073) for the three month period ended March 31, 2019.





21

Cash Flows from Investing Activities

For the three month periods ended March 31, 2020 and March 31, 2019, net cash flows used in investing activities was $-0-.

Cash Flows from Financing Activities

We have financed our operations primarily from debt or the issuance of equity instruments. For the three month period ended March 31, 2020, net cash flows provided from financing activities was $59,124 compared to $64,927 for the three-month period ended March 31, 2019. Cash flows from financing activities for the three month period ended March 31, 2020 consisted of: (i) $5,000 in proceeds from subscriptions for sales of common stock; and (ii) $0 in loans received from stockholders; and (iii) $112,750 in notes payable which was offset by ($0) and a bank overdraft of $(3,000).





PLAN OF OPERATION AND FUNDING

We have incurred losses for the past two fiscal years and had a net loss of $584,872 at March 31, 2020 and $71,679 for continuing operations at March 31, 2018. Our revenues from service and product sales have been non-existent to cover our operating expenses. Our auditors have expressed substantial doubt that we can continue as a going concern. We have continued to push warranty sales, service contracts and control costs but the large overwhelming marketing budgets of our competitors in spite of our superior technology has diminished our ability to compete.

Our Board of Directors has decided to broaden our perspective and add additional business unrelated to the current security product market. The Board has decided to separate the operation into one focusing on further security products development and one to investigate the medical marijuana business.





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.





22

COMMITMENTS AND CONTINGENT LIABILITIES

Our total current liabilities increased to $1,927,740 at the three month period ended March 31, 2020 compared to $1,594,693 at fiscal year ended December 31, 2019. As of March 31, 2020, our short and long term notes payable consist of the following:

We are in default of the following Promissory notes:

Notes payable as of March 31, 2020 and December 31, 2019 consists of the following:

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

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

                     $          5,419

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

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.

                                                $         50,000

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

                                                         $         36,500

                                                                 $        294,669
Discount on convertible notes                                            (115,803 )

                                                                 $        178,866

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. Warranties can be purchased for various periods but generally they are for one year period that begins after any other warranties expire. The revenue from warranties is recognized on a straight line bases over the period covered by the warranty. Prior to the issuance of financial statements management reviews any returns subsequent to the end of the accounting period which are from sales recognized during the accounting period, and makes appropriate adjustments as necessary. Product prices are fixed or determinable and products are only shipped when collectability is reasonably assured.





23







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, 2020, including our financial statements and the related notes thereto.

© Edgar Online, source Glimpses