EXECUTIVE OVERVIEW

The following analysis of our consolidated financial condition and results of operations for the six-month period ended June 30, 2020 and June 30, 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.





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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 June 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 June 30,
                                                         2020                 2019
Revenues, net                                      $              -      $          700
Cost of sales                                                     -                   -
Gross profit (loss)                                               -                 700
Total operating expenses                                     70,630              12,318
Profit (Loss) from operations of continuing
operations                                                  (70,630 )           (11,618 )
Total other income (expense)                             (1,626,610 )          (115,668 )
Net income (loss)                                        (1,697,240 )          (127,286 )
Net income (loss) per share                        $          (0.00 )    $        (0.00 )

Three Month Period Ended June 30, 2020 Compared to Three Month Period Ended June 30, 2019.

Our net loss for the three-month period ended June 30, 2020 for continuing operations was ($70,630) compared to a net loss of ($11,618) during the three-month period ended June 30, 2019 (an increase in net loss of $58,312 of continuing operations). We generated ($0) net revenues during the three-month period ended June 30, 2020 compared to $700 during the three month period ended June 30, 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 zero sales of our services and products which resulted in zero revenues for the three month period ended June 30, 2020 compared to the three month period ended June 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.





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Cost of service provided and the goods sold have been non-existent resulting in zero profit for the three month period ended June 30, 2020 compared to a gross profit of $700 for the three month period ended June 30, 2019 which was a warranty payment.

During the three month period ended June 30, 2020, we incurred total operating expenses of $70,630 compared to $12,318 incurred during the three month period ended June 30, 2019 (an increase of $58,312).

Operating expenses incurred during the three-month period ended June 30, 2020 compared to the three month period ended June 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 newly planted crops.

Our net operating loss for the continuing operations during the three-month period ended June 30, 2020 was ($70,630) compared to a net operating loss of ($11,618) during the three-month period ended June 30, 2019.

During the three-month period ended June 30, 2020, interest expense in the amount of ($60,647) (2019: ($15,221) was incurred. The increase in interest expense was due to increased interest paid on a loan.

During the three-month period ended June 30, 2020, derivative expense in the amount of ($1,565,963) (2019: $100,447) 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 ($1,697,240) for the three-month period ended June 30, 2020 compared to a net loss of ($127,286) for the three-month period ended June 30, 2019 continuing operations.

The weighted average number of shares outstanding was 1,193,884,558 for the three-month period ended June 30, 2020 compared to 368,520,421 for the three-month period ended June 30, 2019

LIQUIDITY AND CAPITAL RESOURCES

Six Month Period Ended June 30, 2018

As of June 30, 2020, our current assets were $21,138 and our current liabilities were $3,411,018. At June 30, 2020, our total assets were comprised of: $1,138 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 $23,715 for a total assets of $44,853.

As of June 30, 2020, current liabilities were comprised of: (i) $148,965 in accounts payable and accrued expenses; (ii) $612,115 in deferred compensation; (iii) $134,237 in accrued and withheld payroll taxes payable; (iv) $33,264 in accrued interest payable; (v) $263,512 in loans from stockholders; (vi) $203,093 in notes payable; (vii) -0- in deferred revenue; and derivative liability of $2,015,832.

Stockholders' deficit increased from ($1,573,858) for fiscal year ended December 31, 2019 to ($3,366,165) for the six-month period ended June 30, 2020.

Cash Flows from Operating Activities

For the six-month period ended June 30, 2020, net cash flows used in operating activities was ($70,589) compared to net cash flows used in operating activities of ($64,491) for the six-month period ended June 30, 2019.





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Cash Flows from Investing Activities

For the six-month periods ended June 30, 2020 was (-0) and (-0-) from June 30, 2019.

Cash Flows from Financing Activities

We have financed our operations primarily from debt or the issuance of equity instruments. For the six-month period ended June 30, 2020, net cash flows provided from financing activities was $70,892 compared to $64,927 for the six-month period ended June 30, 2019. Cash flows from financing activities for the six-month period ended June 30, 2020 consisted of: (i) $17,000 in proceeds from subscriptions for sales of common stock; and (ii) $(3,000) net payments for stockholder loans; and (iii) $112,750 in notes payable ; and $55,858 was repaid on notes payable.





PLAN OF OPERATION AND FUNDING

We have incurred losses for the past two fiscal years and had a net loss of $584,872 at June 30, 2020 and net loss of $71,679 for continuing operations at June 30, 2018. 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.

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. We plan to separate the two product lines into two separate companies to be able to focus on them individualy.





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.





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COMMITMENTS AND CONTINGENT LIABILITIES

Our total current liabilities increased to $1,927,740 at the six-month period ended June 30, 2020 compared to $1,594,693 at fiscal year ended December 31, 2019. As of June 30, 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 June 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.                                            50,000            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                                                          5,500            53,000

                                                      $     258,250     $     247,831
Discount on convertible notes                               (55,157 )        (105,410 )

                                                      $     203,093     $     142,421

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.





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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.

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