10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q

 ☑ QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-30178

VIEW SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Colorado	59-2928366
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6 Park Center Court, Owings Mills,  Baltimore, Maryland  21117

(Address of principal executive offices) (Zip Code)

(410) 242-8439

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes R   No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes    £    No   £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £	Accelerated filer £	Non-accelerated filer £	Smaller reporting company R
		(Do not check if a smaller reporting company)

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o No ☑

 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at November 21, 2018
Common Stock, $.001 par value per share	326,705,526

1

VIEW SYSTEMS, INC.

FORM 10-Q

FOR THE PERIOD ENDED SEPTEMBER 30, 2018

INDEX

			Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			3
PART I. FINANCIAL INFORMATION			4
Item 1.	Financial Statements		4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.	Qualitative and Quantitative Disclosures About Market Risk		19
Item 4.	Controls and Procedures		19
PART II. OTHER INFORMATION			20
Item 1.		Legal Proceedings	22
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.		Defaults Upon Senior Securities	22
Item 4.		[Removed and Reserved]	22
Item 5.		Other information	22
Item 6.		Exhibits	24
SIGNATURES			24

2

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of View Systems, Inc. (the "Company"), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

Insert financials

3

View Systems, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
ASSETS
	September 30,			December 31,
	2018			2017
Current Assets
Cash	$	-		$	37
Total current assets		-			37
Property and Equipment (Net)		797			1,397
Assets of Discontinued Operations		10,367			45
Total assets	$	11,164		$	1,479
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Bank overdraft	$	73		$	-
Accounts payable		161,215			425,212
Deferred compensation		-			264,744
Accrued and withheld payroll taxes payable		134,237			193,654
Accrued interest payable		1,028			155,625
Accrued royalties payable		-			225,000
Loans from stockholders		266,512			584,136
Notes payable		112,114			50,000
Deferred revenue		2,800			59,715
Derivative liability		132,870			-
Liabilities of discontinued operations		77,029			64,260
Total liabilities		887,878			2,022,346
Stockholders' Deficit
Convertible preferred stock, authorized 10,000,000 shares, $.001 par value,
Issued and outstanding 5,589,647		5,590			5,590
Common stock, authorized 950,000,000 shares, $.001 par value,
Issued and outstanding 326,705,526		326,705			326,705
Common stock issuable		16,000			16,000
Additional paid in capital		27,392,125			27,392,125
Accumulated deficit		(28,617,134	)		(29,761,287	)
Total stockholders' deficit		(876,714	)		(2,020,867	)
Total liabilities and stockholders' deficit	$	11,164		$	1,479

The accompanying notes are an integral part of these consolidated financial statements

4

View Systems, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Revenues
Product sales and Installation	$	-		$	-		$	-		$	1,987
Extended warranties		7,317			6,108			29,367			25,258
Service income		1,735			-			1,735			-
Total revenue		9,052			6,108			31,102			27,245
Cost of sales		-			-			-			14,313
Gross profit		9,052			6,108			31,102			12,932
Operating expenses
General and administrative		20,608			4,913			44,045			7,677
Professional fees		7,000			40,000			13,500			40,000
Salaries and benefits		-			30,000			-			90,553
Total operating expenses		27,608			74,913			57,545			138,230
Loss from continuing operations		(18,556	)		(68,805	)		(26,443	)		(125,298	)
Other Income (expense)
Change in value of derivative liability		20,797			-			(22,203	)		-
Gain from renegotiation of debt		220,010			41,031			1,272,123			41,031
Interest expense		(82,465	)		(9,156	)		(85,777	)		(27,468	)
Total other income (expense)		158,342			31,875			1,164,143			13,563
Net income (loss) from continuing operations		139,786			(36,930	)		1,137,700			(111,735	)
Income (loss) from discontinued operations		37,209			(6,680	)		(44,695	)		(37,513	)
Net income (loss)	$	176,995		$	(43,610	)	$	1,093,005		$	(149,248	)
Net Income (loss) per share (basic and diluted)
Continuing operations		-			-			-			-
Discontinued operations		-			-			-			-
	$	-		$	-		$	-		$	-
Weighted average shares outstanding
(basic and diluted)		326,705,526			326,705,526			326,705,526			326,705,526

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 Nine Months Ended
	September 30,
	2018			2017
Cash flows from operating activities:
Net income (loss)	$	1,093,005		$	(149,248	)
Loss from discontinued operations		44,695			37,513
Adjustments to reconcile net loss to
Net cash used in operations:
Depreciation and amortization		600			600
Gain from renegotiation of debt		(1,272,123	)		(41,031	)
Accretion of debt discount		22,203			-
Change in value of derivative liability		82,228			-
Change in operating assets and liabilities:
(Increase) decrease in cash from:
Accounts receivable		-			-
Deposit		-
Increase (decrease) in cash from:
Accounts payable		3,013			36,086
Deferred compensation		-			85,765
Accrued interest		-			22,500
Payroll taxes accrued and withheld		-			4,967
Deferred revenue		(5,767	)		(2,658	)
Net cash used in operating activities- continuing operations		(32,146	)		(5,506	)
Net cash used in operating activities- discontinued operations		(41,846	)		(37,513	)
Net cash used in operating activities		(73,992	)		(43,019	)
Cash flows from financing activities:
Bank overdraft		73
Loans to/from stockholders		(19,118	)		44,771
Proceeds from notes payable		93,000			-
Net cash provided by financing activities		73,955			44,771
Increase (decrease) in cash		(37	)		1,752
Cash at beginning of period		37			94
Cash at end of period	$	-		$	1,846

The accompanying notes are an integral part of these consolidated financial statements

6

View Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (Continued)
	For the Nine Months Ended
	September 30,
	2018		2017
Non cash investing and financing activities:
Reduction in loans from shareholders by agreement	$	301,354	$	-
	$	-	$	-
Cash paid for:
Interest	$	-	$	-
Income taxes	$	-	$	-

The accompanying notes are an integral part of these consolidated financial statements

7

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

View Systems, Inc. and Subsidiaries (the "Company") designs, develops and sells computer software and hardware used in conjunction with surveillance capabilities.  The technology utilizes the compression and decompression of digital inputs.  In March 2002, the Company acquired Milestone Technology, Inc., which has developed a concealed weapons detection portal.  In July 2009, the Company acquired FibreXpress, Inc., which is a company that specializes in developing and selling equipment and components for the fiber optic and communication cable industries.  During the second quarter of 2017, the Company established a new business line in the Erectile Dysfunction Medical market by opening one clinic within its' Medical Therapeutics subsidiary,.  The company is divesting itself from the Medical Therapeutics subsidiary for equity in the acquiring entity.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Milestone Technology, Inc., FibreXpress, Inc. and Medical Therapeutics.   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.

Accounts Receivable

Accounts receivable consists of amounts due from customers.  Management periodically reviews the open accounts and makes a determination as to the ultimate collectability of each account.  Once it is determined that collection is in doubt the account is written off as a bad debt.  In order to provide for accounts that may become uncollectible in the future, the Company has established an allowance for doubtful accounts.  The balance of the allowance for doubtful accounts is based on management's judgment and the Company's prior experience with managing accounts receivable.

  Management's determination is that the accounts receivable are collectible and therefore no allowance for possible uncollectible accounts receivable has been recorded for the periods ended September 30, 2018 and 2017, respectively.

8

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Effective January 1, 2018, the Company adopted ASU No. 2014-9, "Revenue from Contracts with Customers" and the related amendments ("Topic 606") using the modified retrospective method.  Topic 606 was applied to all uncompleted contracts by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2018.  Therefore, the comparative financial information for the six months ended June 30, 2017 has not been adjusted and continues to be reported under Topic 605, "Revenue Recognition".  Due to the cumulative net impact of adopting ASC 606, the January 1, 2018 balance of accumulated deficit was increased by $51,148, primarily relating to the accelerated recognition of revenue on installation projects.

Under Topic 606, revenue is measured based on consideration specified in the contract with a customer.  A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606.  Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a product or service to a customer.  Amounts billed to customers for shipping and handling are included in revenue.

The Company has three main products, namely the concealed weapons detection system, the visual first responder system and the Viewmaxx digital video system.  The concealed weapons detection system and the digital video system each require installation and training.  The customer can engage us for installation and training, which is a revenue source separate and apart from the sale of the product.  Each product has an unconditional 30 day warranty, during which time the product can be returned for a complete refund.  Customers can purchase extended warranties, which provide for replacement or repair of the unit beyond the period provided by the unconditional warranty.

During 2017 and 2018, the Company did not sell its products or installation and training, but rather only sold extended warranties on its' existing installed units.  Warranties can be purchased for various periods but generally they are for one year period that begins after any other warranties expire.  Under the new guidance, there is no change in our revenue recognition for extended warranty as compared to revenue recognition for these transactions under the prior revenue recognition standards.  The Company recognizes revenue from extended warranty ratably over the warranty period.

For our Medical Business, service revenue is considered earned when the service is provided.

Property and Equipment

Property and equipment is recorded at cost and depreciated over their useful lives, using the straight-line and accelerated depreciation methods.  Upon sale or retirement, the cost and related accumulated depreciation are eliminated from the respective accounts, and the resulting gain or loss is included in the results of operations.  The useful lives of property and equipment for purposes of computing depreciation are as follows:

Equipment 5-7 years

Software tools 3 years

Repairs and maintenance charges which do not increase the useful lives of assets are charged to operations as incurred.  Depreciation expense for the periods ended September 30, 2018 and 2017 amounted to $600 and $600, respectively.

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VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Income Taxes

Income taxes are recorded under the assets and liabilities method whereby deferred tax assets and liabilities are recognized for the future tax consequences, measured by enacted tax rates, attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the rate change becomes effective.  Valuation allowances are recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized.

The Company files income tax returns in the U.S. federal jurisdictions, and in various state jurisdictions.  The Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years prior to 2010.  The Company policy is to recognize interest related to unrecognized tax benefits as income tax expense.  The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.

Research and Development

Research and development costs are expensed as incurred.

Advertising

Advertising costs are charged to operations as incurred.  Advertising costs for the periods ended September 30, 2018 and 2017 were $25 and $3,322, respectively.

Nonmonetary Transactions

Nonmonetary transactions are accounted for in accordance with ASC 845 " Nonmonetary Transactions" which requires the transfer or distribution of a nonmonetary asset or liability to be based generally, on the fair value of the asset or liability that is received or surrendered, whichever is more clearly evident.

Financial Instruments

For most financial instruments, including cash, accounts receivable, accounts payable and accruals, management believes that the carrying amount approximates fair value, as the majority of these instruments are short-term in nature.

Stock-Based Compensation

The Company accounts for share-based compensation at fair value.  Share-based compensation cost for stock options granted to employees, board members and service providers is determined at the grant date using an option pricing model that uses level 3 unobservable inputs.  The value of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service period.

10

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss available to common stockholder by the weighted average number of common shares outstanding.  Diluted net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares and dilutive potential common share equivalents then outstanding.  Potential common shares consist of shares issuable upon the exercise of stock options and warrants in addition to shares that may be issued in the event that convertible debt is exchanged for shares of common stock.  The calculation of the net loss per share available to common stockholders for the periods ended September 30, 2018 and 2017 does not include potential shares of common stock equivalents, as their impact would be antidilutive.  The following reconciles amounts reported in the financial statements:

				Weighted Avg
	(Loss)			Shares		Per-share
	(Numerator)			(Denominator)		Amount
Period ended September 30, 2018
Loss from operations which is the amount
that is available to common stockholders	$	1,093,005			326,705,526	$	(0.00	)
Period ended September 30, 2017
Loss from operations which is the amount
that is available to common stockholders	$	(149,248	)		326,705,526	$	(0.00	)

11

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.GOING CONCERN

The Company has incurred and continues to incur, losses from operations.  For the periods ended September 30, 2018 and 2017, the Company incurred net losses from operations $26,443 and $152,298, respectively.  In addition, certain notes payable has come due and the note holders are demanding payment.

Management is very actively working to cure these situations.  It has implemented major plans to for the future growth and development of the Company.  Management is in the process of renegotiating more favorable repayment terms on the notes payable and the Company anticipates that these negotiations will result in extended payment plans.

Historically, the Company has financed its operations primarily through private financing.  It is management's intention to finance operations during the remainder of 2018 primarily through increased sales although there will still be a need for additional equity financing.  In addition, management is actively seeking out mergers and acquisitions which would be beneficial to the future growth of the Company.  There can be no assurance, however, that this financing will be successful and the Company may be required to further reduce expenses and scale back operations.

As described in Note 4, the Company is currently in default on a $50,000 loan from a stockholder.

The consolidated financial statements presented above and the accompanying Notes have been prepared on a going concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future, and does not include any adjustments to reflect possible future effects on the recoverability  and classification of assets, or the amounts and classification of liabilities that may result from the outcome of any extraordinary regulatory action, which would affect our ability to continue as a going concern.

Due to the conditions and events discussed above, there is substantial doubt about the Company's ability to continue as a going concern.

3.NEW ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued new guidance on the accounting for leases, which supersedes previous lease guidance.  Under this guidance, for all leases with terms in excess of one year, including operating leases, the Company will be required to recognize on its balance sheet a lease liability and a right-of-use asset representing its right to use the underlying asset for the lease term.  The new guidance retains a distinction between finance leases and operating leases and the classification criteria is substantially similar to previous guidance.  Additionally, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed.  The Company is currently evaluating the impact of this guidance on its consolidated balance sheets.  This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 with early adoption permitted.

In May 2014, the FASB issued guidance on the recognition of revenue which provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most existing revenue recognition guidance.  The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers.  The Company is currently evaluating the impact of this guidance on its consolidated balance sheets and statement of operations.  This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016.  The Company adopted this ASU on January 1, 2018.  See Note 1 for details of the implementation.

12

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.NOTES PAYABLE

Notes payable as of September 30, 2018 and December 31, 2017 consists of the following:

	2018			2017
Stockholder 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
Auctus Fund, LLC  (see Note 13 re: derivative liability) Convertible promissory note dated June 22, 2018 with interest at 12% per annum with a nine month maturity date.  At any time prior to the complete satisfaction of the Note, the Note shall be convertible into shares of the Company's common stock		40,000
Auctus Fund, LLC  (see Note 13 re: derivative liability) Convertible promissory note dated January 12, 2018 with interest at 12% per annum with a nine month maturity date.  At any time prior to the complete satisfaction of the Note, the Note shall be convertible into shares of the Company's common stock.		53,000			-
Discount on convertible note		(22,520	)		-
TOTAL	$	120,480		$	50,000

13

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.INCOME TAXES

For income tax purposes the Company has net operating loss carry forwards of $28,308,000 as of December 31, 2017 that may be used to offset future taxable income.  In the instance of future corporate acquisitions, the net operating losses may be used to offset the future taxable income of a qualifying subsidiary corporation which meets IRS regulations governing such situations.  The losses have accumulated since 1998 and start to expire in 2018.  IRS regulations also provide that significant changes in ownership (greater than 50%) could result in the expiration of some of the net operating loss carry forwards.  As of  the date of this report the Company has not made an analysis of the changes in ownership to determine if any of these losses have expired.

Net income tax benefit is not recognized at this time because there is no reasonable expectation that the benefit will be realized in the future.

The U.S. Tax Reform Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and business.  For businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21%.  The rate reduction is effective January 1, 2018.  As a result of the rate reduction, the Company has reduced the deferred tax asset balance as of December 31, 2017 by $3,680,000.  As a result of the full valuation allowance on the net deferred tax assets, there was a corresponding adjustment to the valuation allowance for this same amount.  Therefore, there is no impact on the Company's 2017 earnings for the law change.  In accordance with SAB 118, the Company has determined that there is no deferred tax benefit or expense with respect to the re-measurement of certain deferred tax assets and liabilities due to the full valuation allowance against net deferred tax assets.  Additional analysis of the law and the impact to the company will be performed and any impact will be recorded in the respective quarter in 2018, if applicable

14

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. CONVERTIBLE PREFERRED STOCK

At September 30, 2018 and December 31, 2017, 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 or distribution is made to the holders of common stock.  Each Series A Preferred share can be converted into common stock in the ratio of 15:1.

7.OPERATING LEASE

In 2017, the Company leased office space in, Owings Mills, Baltimore, Maryland for use as its' Medical Clinic and Corporate Office.  That lease was terminated in July and the operations were moved to Pittsburgh, PA. The monthly rent on that site is $1,842 per month and the Company is obligated under that lease until August 2019 at which time is renewable on a month to month basis.  Rent expense was $23,724 and $10,776 for the periods ended September 30, 2018 and 2017, respectively.

8.STOCK BASED COMPENSATION

On April 2, 2010 the Company adopted its 2010 Equity Incentive Plan.  Reserved for equity issuances under the Equity Incentive Plan are 50,000,000 shares of our common stock.  During 2011 14,116,433 shares of common stock were issued under the provisions of the 2010 Equity Incentive Plan for which $92,065 of expenses were recognized.

On June 1, 2010 the Company adopted its 2010 Service Provider Stock Compensation Plan.  Reserved for equity issuances under the Service Provider Stock Compensation Plan are 50,000,000 shares of our common stock.  No equity issuances were made during the reporting period from the 2010 Service Provider Stock Compensation Plan.

During 2017 and 2016, the Company issued the following compensatory shares outside of its existing Stock Option and Restricted Share Plans at the discretion of the Board of Directors:

For the year ended December 31, 2016 there were 7,000,000 shares of common stock issued as a payment of interest in the amount of $16,800.

Independent contractors and consultants' expense was based on the estimated value of services rendered or the value of the common stock issued, if more reliably determined.

15

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Options and Warrants

On April 2, 2010, the Company adopted its 2010 Equity Incentive Plan, which authorized, among other forms of incentives, the issuance of stock options.  Reserved for equity issuances under the 2010 Equity Incentive Plan are 50,000,000 shares of our common stock.  No equity issuances have been made from the 2010 Equity Incentive Plan.  Stock options, which may be tax qualified and non-qualified, are exercisable for a period of up to ten years at prices at or above market prices as established on the date of the grant.

Stock Options

Certain nonqualified stock options were issued during the period ended June 30, 2013 to a member of the board of directors as compensation for services performed.

				Weighted		Weighted Average		Aggregate
	Number of			Average Exercise		Remaining		Intrinsic
	Options			Price		Contractual Life		Value
Outstanding at December 31, 2017		10,000,000		$	0.03		50	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		-			-		-		-
Expired		(10,000,000	)
Outstanding at September 30, 2018		-		$	0.00		25	$	-
Exercisable at September 30, 2018		-		$	0.00		-	$	-

The Company uses the Black-Scholes option pricing model to calculate the fair value of options.  Significant assumptions used in this model include:

Annual Dividend
Expected Life (in years)	5.00
Risk-Free Interest Rate	0.78	%
Expected Volatility	325.25	%

16

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.     RELATED PARTY TRANSACTIONS

Certain stockholders have made cash advances to the Company to help with short-term working capital needs.  The net payments to stockholders with unstructured payment plans amounted to $19,118 for the period ended September 30, 2018 and net advances of  $44,771for the period ended September 30, 2017.  During the second quarter of 2018 certain shareholders have opted to forgive these  loans and waive their rights for  repayment.  The total amount forgiven was $301,354.  After these reductions, the total balance due on unstructured loans from stockholders amounted to $316,562 and $637,034 at September 30, 2018 and December 31, 2017, respectively.  Loans from stockholders made with repayment terms are described in Note 4 above.

10.      ISSUABLE COMMON STOCK

             As of June 30, 2018 and December 31, 2017 740,000 shares of the authorized shares, amounting to $16,000 had not been issued.

11.  CONTINGENT LIABILITY

        Effective January 1, 2015 the Board of Directors authorized a new employment contract with Gunther Than, CEO of View Systems, Inc.  That employment contract provides that in the event of a change in control of the Board of Directors or a buyout or takeover or substantial change of management structure Mr. Than will receive a minimum of three year's salary plus 4.8 million shares of unrestricted stock of the equivalent in cash at Mr. Than's direction.  Mr. Than's current base salary is $120,000 per annum.

17

VIEW SYSTEMS, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.  DERIVATIVE INSTRUMENT

             The Company has a note payable with elements that qualify as a derivative instrument.  The note payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.  The note bears interest at 12%, has a maturity of October 24, 2018 and convertible at the lowest trading price during the previous 25 days ending on the last trading day prior to notice, or 50% of the Lowest trading price during the previous 25 days ending on the last trading day prior to notice.  This variable conversion feature requires bifrucation from the convertible debenture and measurement at fair value.

             The derivative liability, as it relates to the instrument, is shown in the following table:

Beginning balance, January 1, 2018	$	-
Additional issuance		53,000
Exercised/converted		-
Reclassification to equity		-
Change in value of derivative liability		79.870
Fair value,  September 30, 2018	$	132,870

             The derivative liability was valued using the Black-Scholes method with the following inputs:

Expected life	9 months
Stock price volatility		220	%
Annual risk-free interest rate		1.5	%
Expected dividends	None

ASC 820, "Fair Value Measurements" and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument is categorized within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Assets and liabilities measured at fair value on a recurring basis were presented on the Company's consolidated balance sheet as at September 30, 2018 as follows:

Description	Fair Value Measurements at September 30, 2018 Using Fair Value Hierarchy
	Total			Level 1			Level 2			Level 3
Derivative liability		$	96,000		$	-		$	-		$	96,000
Total		$	96,0000		$	-		$	-		$	96,000

17

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

EXECUTIVE OVERVIEW

The following analysis of our consolidated financial condition and results of operations for the nine-month period ended September 30, 2018 and September 30, 2017 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.  In August of 2018 we licensed our current version of the ViewScan to a company called Ipvideo Corporation.  The conditions of the license are that they will bear all cost of manufacturing and sales and pay View Systems $300 per unit sold by them.

Our strategy for 2019 is to develop a subsequent ViewScan that is technologically superior and has a wider opening.  The opening for doorways used in commercial buildings is a minimum of 36 inches.  There currently are no Concealed Weapons Detection walkthrough archways that have a standard 36-inch opening.  We believe based on past experiments that View Systems is able to create a portal that facilitates a 36 inch plus through way,

Then, the next phase of our business plan will be to raise additional funds through common stock offerings and loans to provide working capital to finance the development of a new and exclusive walk through that will be unique and desirable by security product vendors and for government applications. We also intend to continue to strengthen our balance sheet by paying off debt either through exchange of equity or the payment of debt obligations with cash.  

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 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.

Medical Services Including Men's Health and Physiological Quality of Life

The company has decided to sell its division; which is comprised of Men's Health clinic interests, to an outside firm for 1. Payment of debt incurred in starting the clinics and 2. Participation in equity of the receiving entity.  We are currently negotiating the final details of the transaction.

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 nine months ended September 30, 2018 and September 30, 2017 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, 2017.

18

SUMMARY COMPARISON OF OPERATING RESULTS*
	For Nine Months ended September 30,
	2018				2017
Revenues, net		$	31,102			$	27,245
Cost of sales			-				14,313
Gross profit (loss)			31,102				12,932
Total operating expenses			57,545				138,230
Profit (Loss) from operations			(26,443	)			(125,298	)
Total other income (expense)			1,164,143				13,563
Loss from discontinued operations			(44,695	)			(37,513	)
Net income (loss)			1,093,005				(149,248	)
Net income (loss) per share		$	(0.00	)		$	(0.00	)

Nine Month Period Ended September 30, 2018 Compared to Nine Month Period Ended September 30, 2017.

Our net income for the nine-month period ended September 30, 2018 was $1,093,005 compared to a net loss of ($149,248) during the nine-month period ended September 30, 2017 (an increase in net income of $1,242,253).  We generated net revenues of $31,102 during the nine-month period ended September 30, 2018 compared to $27,245 during the nine-month period ended September 30, 2017 (an increase in net revenue of $3,857). Revenue is considered earned when service is provided and in addition when the product is shipped to the customer.

We have experienced an increase in sales of our services and products which resulted in increase revenues for the nine-month period ended September 30, 2018 compared to the nine-month period ended September 30, 2017. This increase is due to an increase in orders for the View Scan.  We have licensed the View Scan to Ipvideo to whom we licensed our SecureScan product.

Cost of service provided and the goods sold decreased during the nine-month period ended September 30, 2018 to  $-0- from $14,313 incurred during the nine-month period ended September 30, 2017, resulting in a gross profit of $31,102 for the nine-month period ended September 30, 2018 compared to a gross profit of $12,932 for the nine-month period ended September 30, 2017.

During the nine-month period ended September 30, 2018, we incurred operating expenses of $57,545 compared to $138,230 incurred during the nine-month period ended September 30, 2017 a decrease of $80,685.

Operating expenses incurred during the nine-month period ended September 30, 2018 compared to the nine-month period ended September 30, 2017 decreased primarily due to the decrease in professional fees and general expenses.

Our net income during the nine-month period ended September 30, 2018 was $1,093,005 compared to a net loss of ($149,248) during the nine-month period ended September 30, 2017.

During the nine-month period ended September 30, 2018, interest expense in the amount of ($85,777) (2017: ($27,468) was incurred. The increase in interest expense was due to continued interest paid on a loan.

During the nine-month period ended September 30, 2018, a change of ($22,203) in value in derivative liability was incurred.

During the nine-month period ended September 30, 2018, we recognized other income of $1,272,123 due to the forgiveness and settlement of various liabilities.

After deducting other expense, we realized a net income of $1,137,700 for the nine-month period ended September 30, 2018 compared to a net loss of ($111,735) for nine-month period ended September 30, 2017.

The weighted average number of shares outstanding was 326,705,526 for the nine-month period ended June 30, 2018 compared to 326,705,526 for the nine-month period ended June 30, 2017.

 

19

LIQUIDITY AND CAPITAL RESOURCES

Nine Month Period Ended September 30, 2018

As of September 30, 2018, our current assets were $0 and our current liabilities were $887,878, which resulted in a working capital deficit of $887,878.

As of September 30, 2018, current liabilities were comprised of: (i) $161,215 in accounts payable and accrued expenses; (ii) –$73- in a bank overdraft; (iii) $134,237 in accrued and withheld payroll taxes payable; (iv) $1,028 in accrued interest payable; (v) –(0)- in accrued royalties payable; (vi) $266,512 loans from stockholders; (vii) $112,114 in notes payable; (viii) deferred revenue of $2,800; derivative liability of $132,870 and $77,029 of liabilities from discontinued operations.

As of September 30, 2018 our total assets were $11,164 comprised of: (i) -0- in current assets; (ii) property and equipment (net) of $797; and (iii) $10,367 of assets of discontinued operations. The increase in total assets during the nine-month period from fiscal year ended December 31, 2017 was primarily due to the increase in accounts receivable, which is included within assets of discontinued operations.

At September 30, 2018 our total liabilities were $887,878.

Stockholders' deficit decreased from ($2,020,867) for fiscal year ended December 31, 2017 to ($876,714) for the nine-month period ended September 30, 2018.

Cash Flows from Operating Activities

For the nine-month period ended September 30, 2018, net cash flows provided by operating activities was $(73,992) compared to net cash flows used in operating activities of ($43,019) for the nine-month period ended September 30, 2017.

Cash Flows from Investing Activities

For the six-month periods ended June 30, 2018 and June 30, 2017, 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 nine-month period ended September 30, 2018, net cash flows provided from financing activities was $73,995 compared to $44,771 for the nine-month period ended September 30, 2017. Cash flows from financing activities for the nine-month period ended September 30, 2018 consisted of: (i) $73 in a bank overdraft; and (ii) $0 in loans received from stockholders; and (iii) $93,000 in notes payable which was offset by ($19,118) in principal payment on notes payable.

PLAN OF OPERATION AND FUNDING

We have had a net income of $1,093,005 at September 30, 2018 compared to a loss of $(149,248) at September 30, 2017. Our revenues have been insufficient to cover our operating expenses. Our auditors have expressed substantial doubt that we can continue as a going concern.

Our Board of Directors had decided to start medical clinics the Erectile Dysfunction market which we did during 2017 and the last nine months of 2018.

We have been offered an acquisition of the clinics by a group of professionals experienced in the Erectile Dysfunction.

20

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 2019. 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 2019, 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 Annual Report do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts of liabilities that may result should we be unable to continue as a going concern.

Our independent registered accounting firm included an explanatory paragraph in their reports on the accompanying financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

COMMITMENTS AND CONTINGENT LIABILITIES

Our total current liabilities decreased at the nine month period ended September 30, 2018 to $887,878 compared to $2,022,346 at fiscal year ended December 31, 2017. As of September 30, 2018, our short and long term notes payable consist of the following:

We are in default of a September 18, 2009 demand loan payable to an investor which was due December 17, 2009 in the amount of $50,000. Interest had accrued at 5% per month since December 17, 2009. The loan is secured by our accounts receivable. Effective July 1, 2012 the accrual of interest was halted by agreement with the lender.  The lender has not demanded repayment.

We are in default of a convertible promissory note $53,000 dated January 12, 2018 with interest at 12% per annum with a nine-month maturity date.  At any time prior to the complete satisfaction of the Note, the Note shall be convertible into shares of the Company's common stock.

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.

21

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, 2016, including our financial statements and the related notes thereto.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer/Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of September 30, 2018. Based on such evaluation, we have concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer/Principal Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining internal control over our financial reporting. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over our financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that in reasonable detail accurately and fairy reflect our transactions.

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on our financial statements.

All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error or circumvention through collusion of improper overriding of controls. Therefore, even those internal control systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2018. In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSD) in Internal-Control-Integrated Framework and implemented a process to monitor and assess both the design and operating effectiveness of our internal controls. Based on this assessment, management believes that as of March 31, 2018, our internal control over financial reporting was effective.

22

This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this quarterly report .

Changes in Internal Control Over Financial Reporting

Our management has evaluated, with the participation of our Chief Executive Officer/Chief Financial Officer, changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended September 30, 2018. In connection with such evaluation, there have been no changes to our internal control over financial reporting that occurred since the beginning of our six-month period ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  [REMOVED AND RESERVED]

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Form 10-Q:

The following exhibits are filed as part of this Form 10-K:

10.1	View Systems, Inc. 2010 Equity Incentive Plan (Incorporated by reference to exhibit 10.1 to Form 10-Q filed May 14, 2010)
10.2	View Systems, Inc. 2010 Service Provider Stock Compensation Plan (Incorporated by reference to exhibit 10.4 to Form 10-Q filed August 19, 2010)
10.3	Employment agreement between View Systems and Gunther Than, dated December 1, 2009 (Incorporated by reference to exhibit 10.1 to Form 8-K, filed January 11, 2010)
10.4	Subcontractor Agreement dated March 9, 2009 between MasTec North America, Inc. and View Systems, Inc. (Incorporated by reference to exhibit 10.3 for Form 10-Q, Amendment No. 1, for the period ended March 31, 2009)
10.3	Purchase Agreement, dated June 1, 2012 (Incorporated by reference to exhibit 10.1 to Form 8-K, filed July 3, 2012)
10.4	Amendment to Purchase Agreement, dated June 28, 2012 (Incorporated by reference to exhibit 10.2 to Form 8-K, filed July 3, 2012)
21.1	List of Subsidiaries
31.1	Rule 13a-15(e)/15d-15(e) Certification by the Chief Executive Officer and Chief Financial Officer *
32.1	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 

	VIEW SYSTEMS, INC.
Date: November 21, 2018	By:	/s/ Gunther Than
		Gunther Than
		Chief Executive Officer (Principal executive officer, principal financial officer, and principal accounting officer)

24

EX-31.1

a

 

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION

302 OF THE SARBANES OXLEY ACT OF 2002

I, Gunther Than, certify that

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2018 of View Systems Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 21, 2018	By:	/s/ Gunther Than
		Gunther Than
		Chief Executive Officer/Principal Financial Officer

EX-32.1

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of View Systems Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Gunther Than, Chief Executive Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company, and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

By /s/ Gunther Than

Gunther Than

Director, Chief Executive Officer and Chief Financial Officer

November 21, 2018

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 ("Section 906"), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to View System, Inc., and will be retained by View Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 21, 2018
Document And Entity Information
Entity Registrant Name	VIEW SYSTEMS INC
Entity Central Index Key	0001075857
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		326,705,526
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018
Entity Emerging Growth Company	false
Entity Small Business	true

XML

Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current Assets
Cash		$ 37
Total current assets		37
Property and Equipment (Net)	797	1,397
Assets of Discontinued Operations	10,367	45
Other Assets
Total assets	11,164	1,479
Current Liabilities
Bank overdraft	73
Accounts payable and accrued expenses	161,215	425,212
Deferred compensation		264,744
Accrued and withheld payroll taxes payable	134,237	193,654
Accrued interest payable	1,028	155,625
Accrued royalties payable		225,000
Loans from stockholders	266,512	584,136
Notes payable	112,114	50,000
Deferred revenue	2,800	59,715
Derivative liability	132,870
Liabilities of discontinued operations	77,029	64,260
Total current liabilities	887,878	2,022,346
Stockholders' Deficit
Convertible preferred stock, authorized 10,000,000 shares, $.001 par value, Issued and outstanding 5,589,647	5,590	5,590
Common stock, authorized 950,000,000 shares, $.001 par value, Issued and outstanding 326,705,526	326,705	326,705
Common stock issuable	16,000	16,000
Additional paid in capital	27,392,125	27,392,125
Accumulated deficit	(28,617,134)	(29,761,287)
Total stockholders' deficit	(876,714)	(2,020,867)
Total Liabilities and Stockholders' Deficit	$ 11,164	$ 1,479

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred Stock Shares Par Value	$ 0.001	$ 0.001
Preferred Stock Shares Authorized	10,000,000	10,000,000
Preferred Stock Shares Issued	5,589,647	5,589,647
Preferred Stock Shares Outstanding	5,589,647
Common Stock Shares Par Value	$ 0.001	$ 0.001
Common Stock Shares Authorized	950,000,000	950,000,000
Common Stock Shares Issued	326,705,526	326,705,526
Common Stock Shares Outstanding	326,705,526	326,705,526

XML

Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues
Product sales and Installation				$ 1,987
Extended warranties	7,317	6,108	29,367	25,258
Service income	1,735		1,735
Total revenue	9,052	6,108	31,102	27,245
Cost of sales				14,313
Gross profit	9,052	6,108	31,102	12,932
Operating expenses
General and administrative	20,608	4,913	44,045	7,677
Professional fees	7,000	40,000	13,500	40,000
Salaries and benefits		30,000		90,553
Total operating expenses	27,608	74,913	57,545	138,230
Loss from continuing operations	(18,556)	(68,805)	(26,443)	(125,298)
Other Income (expense)
Change in value of derivative liability	20,797		(22,203)
Gain from renegotiation of debt	220,010	41,031	1,272,123	41,031
Interest expense	(82,465)	(9,156)	(85,777)	(27,468)
Total other income (expense)	158,342	31,875	1,164,143	13,563
Net income (loss) from continuing operations	139,786	(36,930)	1,137,700	(111,735)
Income (loss) from discontinued operations	37,209	(6,680)	(44,695)	(37,513)
Net income (loss)	$ 176,995	$ (43,610)	$ 1,093,005	$ (149,248)
Net Income (loss) per share (basic and diluted):Continuing operations
Net Income (loss) per share (basic and diluted):Discontinued operations
Weighted average shares outstanding (basic)	326,705,526	326,705,526	326,705,526	326,705,526

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Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net income (loss)	$ 1,093,005	$ (149,248)
Income (loss) from discontinued operations	44,695	37,513
Adjustments to net loss to (Net cash used) in operations:
Depreciation and amortization	600	600
Gain from renegotiated debt	(1,272,123)	(41,031)
Accretion of debt discount	22,203
Change in value of derivative liability	82,228
Change in operating assets and liabilities:
Accounts receivable
Deposits
Accounts payable	3,013	36,086
Deferred compensation		85,765
Accrued interest		22,500
Payroll taxes accrued and withheld		4,967
Deferred revenue	(5,767)	(2,658)
Net cash used in operating activities- continuing operations	(32,146)	(5,506)
Net cash used in operating activities- discontinued operations	(41,846)	(37,513)
Net cash used in operating activities	(73,992)	(43,019)
Cash flows from financing activities:
Bank overdraft	73
Loans to/from stockholders	(19,118)	44,771
Proceeds from notes payable	93,000
Net cash provided by (used in) financing activities	73,955	44,771
Increase (decrease) in cash	(37)	1,752
Cash at beginning of period	37	94
Cash at end of period		1,846
Non cash investing and financing activities:
Reduction in loans from shareholders by agreement	301,354
Cash paid for:
Interest
Income taxes

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

View Systems, Inc. and Subsidiaries (the "Company") designs, develops and sells computer software and hardware used in conjunction with surveillance capabilities.  The technology utilizes the compression and decompression of digital inputs.  In March 2002, the Company acquired Milestone Technology, Inc., which has developed a concealed weapons detection portal.  In July 2009, the Company acquired FibreXpress, Inc., which is a company that specializes in developing and selling equipment and components for the fiber optic and communication cable industries.  During the second quarter of 2017, the Company established a new business line in the Erectile Dysfunction Medical market by opening one clinic within its' Medical Therapeutics subsidiary. The company is divesting itself from the Medical Therapeutics subsidiary for equity in the acquiring entity.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Milestone Technology, Inc., FibreXpress, Inc. and Medical Therapeutics.   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.

Accounts Receivable

Accounts receivable consists of amounts due from customers.  Management periodically reviews the open accounts and makes a determination as to the ultimate collectability of each account.  Once it is determined that collection is in doubt the account is written off as a bad debt.  In order to provide for accounts that may become uncollectible in the future, the Company has established an allowance for doubtful accounts.  The balance of the allowance for doubtful accounts is based on management's judgment and the Company's prior experience with managing accounts receivable.

  Management's determination is that the accounts receivable are collectible and therefore no allowance for possible uncollectible accounts receivable has been recorded for the periods ended September 30, 2018 and 2017, respectively.

Revenue Recognition

Effective January 1, 2018, the Company adopted ASU No. 2014-9, "Revenue from Contracts with Customers" and the related amendments ("Topic 606") using the modified retrospective method.  Topic 606 was applied to all uncompleted contracts by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2018.  Therefore, the comparative financial information for the six months ended June 30, 2017 has not been adjusted and continues to be reported under Topic 605, "Revenue Recognition".  Due to the cumulative net impact of adopting ASC 606, the January 1, 2018 balance of accumulated deficit was increased by $51,148, primarily relating to the accelerated recognition of revenue on installation projects.

Under Topic 606, revenue is measured based on consideration specified in the contract with a customer.  A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606.  Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a product or service to a customer.  Amounts billed to customers for shipping and handling are included in revenue.

The Company has three main products, namely the concealed weapons detection system, the visual first responder system and the Viewmaxx digital video system.  The concealed weapons detection system and the digital video system each require installation and training.  The customer can engage us for installation and training, which is a revenue source separate and apart from the sale of the product.  Each product has an unconditional 30 day warranty, during which time the product can be returned for a complete refund.  Customers can purchase extended warranties, which provide for replacement or repair of the unit beyond the period provided by the unconditional warranty.

During 2017 and 2018, the Company did not sell its products or installation and training, but rather only sold extended warranties on its' existing installed units.  Warranties can be purchased for various periods but generally they are for one year period that begins after any other warranties expire.  Under the new guidance, there is no change in our revenue recognition for extended warranty as compared to revenue recognition for these transactions under the prior revenue recognition standards.  The Company recognizes revenue from extended warranty ratably over the warranty period.

For our Medical Business, service revenue is considered earned when the service is provided.

Property and Equipment

Property and equipment is recorded at cost and depreciated over their useful lives, using the straight-line and accelerated depreciation methods.  Upon sale or retirement, the cost and related accumulated depreciation are eliminated from the respective accounts, and the resulting gain or loss is included in the results of operations.  The useful lives of property and equipment for purposes of computing depreciation are as follows:

Equipment 5-7 years

Software tools 3 years

Repairs and maintenance charges which do not increase the useful lives of assets are charged to operations as incurred.  Depreciation expense for the periods ended September 30, 2018 and 2017 amounted to $600 and $600, respectively.

Income Taxes

Income taxes are recorded under the assets and liabilities method whereby deferred tax assets and liabilities are recognized for the future tax consequences, measured by enacted tax rates, attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the rate change becomes effective.  Valuation allowances are recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized.

The Company files income tax returns in the U.S. federal jurisdictions, and in various state jurisdictions.  The Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years prior to 2010.  The Company policy is to recognize interest related to unrecognized tax benefits as income tax expense.  The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.

Research and Development

Research and development costs are expensed as incurred.

Advertising

Advertising costs are charged to operations as incurred.  Advertising costs for the six months ended September  30, 2018 and 2017 were $25 and $3,322, respectively.

Nonmonetary Transactions

Nonmonetary transactions are accounted for in accordance with ASC 845 " Nonmonetary Transactions" which requires the transfer or distribution of a nonmonetary asset or liability to be based generally, on the fair value of the asset or liability that is received or surrendered, whichever is more clearly evident.

Financial Instruments

For most financial instruments, including cash, accounts receivable, accounts payable and accruals, management believes that the carrying amount approximates fair value, as the majority of these instruments are short-term in nature.

Stock-Based Compensation

The Company accounts for share-based compensation at fair value.  Share-based compensation cost for stock options granted to employees, board members and service providers is determined at the grant date using an option pricing model that uses level 3 unobservable inputs.  The value of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service period.

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss available to common stockholder by the weighted average number of common shares outstanding.  Diluted net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares and dilutive potential common share equivalents then outstanding.  Potential common shares consist of shares issuable upon the exercise of stock options and warrants in addition to shares that may be issued in the event that convertible debt is exchanged for shares of common stock.  The calculation of the net loss per share available to common stockholders for the periods ended September 30, 2018 and 2017 does not include potential shares of common stock equivalents, as their impact would be antidilutive.  The following reconciles amounts reported in the financial statements:

				Weighted Avg
	(Loss)			Shares		Per-share
	(Numerator)			(Denominator)		Amount
Period ended September 30, 2018
Loss from operations which is the amount
that is available to common stockholders	$	1.093,005			326,705,526	$	(0.00	)
Period ended September 30, 2017
Loss from operations which is the amount
that is available to common stockholders	$	(149,248	)		326,705,526	$	(0.00	)

11

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GOING CONCERN

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN

2.GOING CONCERN

 

The Company has incurred and continues to incur, losses from operations.  For the periods ended September 30, 2018 and 2017, the Company incurred net losses from operations $26,443 and $152,298, respectively.  In addition, certain notes payable has come due and the note holders are demanding payment.

Management is very actively working to cure these situations.  It has implemented major plans to for the future growth and development of the Company.  Management is in the process of renegotiating more favorable repayment terms on the notes payable and the Company anticipates that these negotiations will result in extended payment plans.

Historically, the Company has financed its operations primarily through private financing.  It is management's intention to finance operations during the remainder of 2018 primarily through increased sales although there will still be a need for additional equity financing.  In addition, management is actively seeking out mergers and acquisitions which would be beneficial to the future growth of the Company.  There can be no assurance, however, that this financing will be successful and the Company may be required to further reduce expenses and scale back operations.

As described in Note 4, the Company is currently in default on a $50,000 loan from a stockholder.

The consolidated financial statements presented above and the accompanying Notes have been prepared on a going concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future, and does not include any adjustments to reflect possible future effects on the recoverability  and classification of assets, or the amounts and classification of liabilities that may result from the outcome of any extraordinary regulatory action, which would affect our ability to continue as a going concern.

Due to the conditions and events discussed above, there is substantial doubt about the Company's ability to continue as a going concern.

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NEW ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

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.

In May 2014, the FASB issued guidance on the recognition of revenue which provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most existing revenue recognition guidance.  The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers.  The Company is currently evaluating the impact of this guidance on its consolidated balance sheets and statement of operations.  This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016.  The Company adopted this ASU on January 1, 2018.   See Note 1 for details of the implementation.

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NOTES PAYABLE

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

NOTES PAYABLE

4.NOTES PAYABLE

Notes payable as of September 30, 2018 and December 31, 2017 consists of the following:

	2018			2017
Stockholder 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
Auctus Fund, LLC  (see Note 13 re: derivative liability) Convertible promissory note dated June 22, 2018 with interest at 12% per annum with a nine month maturity date.  At any time prior to the complete satisfaction of the Note, the Note shall be convertible into shares of the Company's common stock		40,000
Auctus Fund, LLC  (see Note 13 re: derivative liability) Convertible promissory note dated January 12, 2018 with interest at 12% per annum with a nine month maturity date.  At any time prior to the complete satisfaction of the Note, the Note shall be convertible into shares of the Company's common stock.		53,000			-
Discount on convertible note		(22,520	)		-
TOTAL	$	120,480		$	50,000

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INCOME TAXES

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

5.INCOME TAXES

               For income tax purposes the Company has net operating loss carry forwards of $28,308,000 as of December 31, 2017 that may be used to offset future taxable income.  In the instance of future corporate acquisitions, the net operating losses may be used to offset the future taxable income of a qualifying subsidiary corporation which meets IRS regulations governing such situations.  The losses have accumulated since 1998 and start to expire in 2018.  IRS regulations also provide that significant changes in ownership (greater than 50%) could result in the expiration of some of the net operating loss carry forwards.  As of  the date of this report the Company has not made an analysis of the changes in ownership to determine if any of these losses have expired.

Net income tax benefit is not recognized at this time because there is no reasonable expectation that the benefit will be realized in the future.

The U.S. Tax Reform Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and business.  For businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21%.  The rate reduction is effective January 1, 2018.  As a result of the rate reduction, the Company has reduced the deferred tax asset balance as of December 31, 2017 by $3,680,000.  As a result of the full valuation allowance on the net deferred tax assets, there was a corresponding adjustment to the valuation allowance for this same amount.  Therefore, there is no impact on the Company's 2017 earnings for the law change.  In accordance with SAB 118, the Company has determined that there is no deferred tax benefit or expense with respect to the re-measurement of certain deferred tax assets and liabilities due to the full valuation allowance against net deferred tax assets.  Additional analysis of the law and the impact to the company will be performed and any impact will be recorded in the respective quarter in 2018, if applicable.

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CONVERTIBLE PREFERRED STOCK

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

CONVERTIBLE PREFERRED STOCK

6. CONVERTIBLE PREFERRED STOCK

At September 30, 2018 and December 31, 2017, 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 or distribution is made to the holders of common stock.  Each Series A Preferred share can be converted into common stock in the ratio of 15:1.

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OPERATING LEASE

9 Months Ended

Sep. 30, 2018

Leases [Abstract]

OPERATING LEASE

7.OPERATING LEASE

In 2017, the Company leased office space in, Owings Mills, Baltimore, Maryland for use as its' Medical Clinic and Corporate Office.  That lease was terminated in July and the operations were moved to Pittsburgh, PA. The monthly rent on that site is $1,842 per month and the Company is obligated under that lease until August 2019 at which time is renewable on a month to month basis.  Rent expense was $23,724 and $10,776 for the periods ended September 30, 2018 and 2017, respectively.

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STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK BASED COMPENSATION

8.STOCK BASED COMPENSATION

On April 2, 2010 the Company adopted its 2010 Equity Incentive Plan.  Reserved for equity issuances under the Equity Incentive Plan are 50,000,000 shares of our common stock.  During 2011 14,116,433 shares of common stock were issued under the provisions of the 2010 Equity Incentive Plan for which $92,065 of expenses were recognized.

On June 1, 2010 the Company adopted its 2010 Service Provider Stock Compensation Plan.  Reserved for equity issuances under the Service Provider Stock Compensation Plan are 50,000,000 shares of our common stock.  No equity issuances were made during the reporting period from the 2010 Service Provider Stock Compensastion Plan.

During 2017 and 2016, the Company issued the following compensatory shares outside of its existing Stock Option and Restricted Share Plans at the discretion of the Board of Directors:

For the year ended December 31, 2016 there were 7,000,000 shares of common stock issued as a payment of interest in the amount of  $16,800.

Independent contractors and consultants' expense was based on the estimated value of services rendered or the value of the common stock issued, if more reliably determined.

Stock Options and Warrants

On April 2, 2010, the Company adopted its 2010 Equity Incentive Plan, which authorized, among other forms of incentives, the issuance of stock options.  Reserved for equity issuances under the 2010 Equity Incentive Plan are 50,000,000 shares of our common stock.  No equity issuances have been made from the 2010 Equity Incentive Plan.  Stock options, which may be tax qualified and non-qualified, are exercisable for a period of up to ten years at prices at or above market prices as established on the date of the grant.

Stock Options

Certain nonqualified stock options were issued during the period ended September 30, 2013 to a member of the board of directors as compensation for services performed.

				Weighted		Weighted Average		Aggregate
	Number of			Average Exercise		Remaining		Intrinsic
	Options			Price		Contractual Life		Value
Outstanding at December 31, 2017		10,000,000		$	0.03		50	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		-			-		-		-
Expired		(10,000,000	)
Outstanding at September 30, 2018		-		$	0.00		25	$	-
Exercisable at September 30, 2018		-		$	0.00		-	$	-

The Company uses the Black-Scholes option pricing model to calculate the fair value of options.  Significant assumptions used in this model include:

Annual Dividend
Expected Life (in years)	5.00
Risk-Free Interest Rate	0.78	%
Expected Volatility	325.25	%

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

9.     RELATED PARTY TRANSACTIONS

Certain stockholders have made cash advances to the Company to help with short-term working capital needs.  The net payments to stockholders with unstructured payment plans amounted to $19,118 for the period ended September 30, 2018 and net advances of  $44,771 for the period ended September 30, 2017.  During the second quarter of 2018 certain shareholders have opted to forgive these  loans and waive their rights for  repayment.  The total amount forgiven was $301,354.  After these reductions, the total balance due on unstructured loans from stockholders amounted to $316,562 and $637,034 at September 30, 2018 and December 31, 2017, respectively.  Loans from stockholders made with repayment terms are described in Note 4 above.

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ISSUABLE COMMON STOCK

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

ISSUABLE COMMON STOCK

10.      ISSUABLE COMMON STOCK

             As of June 30, 2018 and December 31, 2017 740,000 shares of the authorized shares, amounting to $16,000 had not been issued.

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CONTINGENT LIABILITY

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

CONTINGENT LIABILITY

11.  CONTINGENT LIABILITY

        Effective January 1, 2015 the Board of Directors authorized a new employment contract with Gunther Than, CEO of View Systems, Inc.  That employment contract provides that in the event of a change in control of the Board of Directors or a buyout or takeover or substantial change of management structure Mr. Than will receive a minimum of three year's salary plus 4.8 million shares of unrestricted stock of the equivalent in cash at Mr. Than's direction.  Mr. Than's current base salary is $120,000 per annum.

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DERIVATIVE INSTRUMENT

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENT

12.  DERIVATIVE INSTRUMENT

             The Company has a note payable with elements that qualify as a derivative instrument.  The note payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.  The note bears interest at 12%, has a maturity of October 24, 2018 and convertible at the lowest trading price during the previous 25 days ending on the last trading day prior to notice, or 50% of the Lowest trading price during the previous 25 days ending on the last trading day prior to notice.  This variable conversion feature requires bifrucation from the convertible debenture and measurement at fair value.

             The derivative liability, as it relates to the instrument, is shown in the following table:

Beginning balance, January 1, 2018	$	-
Additional issuance		53,000
Exercised/converted		-
Reclassification to equity		-
Change in value of derivative liability		79,870
Fair value, September 30, 2018	$	132,870

             The derivative liability was valued using the Black-Scholes method with the following inputs:

Expected life	9 months
Stock price volatility		220	%
Annual risk-free interest rate		1.5	%
Expected dividends	None

ASC 820, "Fair Value Measurements" and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument is categorized within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Assets and liabilities measured at fair value on a recurring basis were presented on the Company's consolidated balance sheet as at September 30, 2018 as follows:

Description	Fair Value Measurements at September 30, 2018 Using Fair Value Hierarchy
	Total			Level 1			Level 2			Level 3
Derivative liability		$	96,000		$	-		$	-		$	96,000
Total		$	96,0000		$	-		$	-		$	96,000

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Nature of Operations

Nature of Operations

View Systems, Inc. and Subsidiaries (the "Company") designs, develops and sells computer software and hardware used in conjunction with surveillance capabilities.  The technology utilizes the compression and decompression of digital inputs.  In March 2002, the Company acquired Milestone Technology, Inc., which has developed a concealed weapons detection portal.  In July 2009, the Company acquired FibreXpress, Inc., which is a company that specializes in developing and selling equipment and components for the fiber optic and communication cable industries.  During the second quarter of 2017, the Company established a new business line in the Erectile Dysfunction Medical market by opening one clinic within its' Medical Therapeutics subsidiary. The company is divesting itself from the Medical Therapeutics subsidiary for equity in the acquiring entity.

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

Basis of Consolidation

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Milestone Technology, Inc.,  FibreXpress, Inc. and Medical Therapeutics.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

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 

Cash and cash equivalents include all highly liquid investments with original maturities of three months or less

Accounts Receivable

Accounts Receivable

Accounts receivable consists of amounts due from customers.  Management periodically reviews the open accounts and makes a determination as to the ultimate collectability of each account.  Once it is determined that collection is in doubt the account is written off as a bad debt.  In order to provide for accounts that may become uncollectible in the future, the Company has established an allowance for doubtful accounts.  The balance of the allowance for doubtful accounts is based on management's judgment and the Company's prior experience with managing accounts receivable.

  Management's determination is that the accounts receivable are collectible and therefore no allowance for possible uncollectible accounts receivable has been recorded for the periods ended September 30, 2018 and 2017, respectively.

Revenue Recognition

Revenue Recognition

Effective January 1, 2018, the Company adopted ASU No. 2014-9, "Revenue from Contracts with Customers" and the related amendments ("Topic 606") using the modified retrospective method. Topic 606 was applied to all uncompleted contracts by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative financial information for the three months ended March 31, 2017 has not been adjusted and continues to be reported under Topic 605, "Revenue Recognition".     Due to the cumulative net impact of adopting ASC 606, the January 1, 2018 balance of accumulated deficit was increased by $51,148, primarily relating to the accelerated recognition of revenue on installation projects.

Under Topic 606, revenue is measured based on consideration specified in the contract with a customer. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a product or service to a customer. Amounts billed to customers for shipping and handling are included in revenue.

The Company has three main products, namely the concealed weapons detection system, the visual first responder system and the Viewmaxx digital video system.  The concealed weapons detection system and the digital video system each require installation and training.  The customer can engage us for installation and training, which is a separate performance obligation and apart from the sale of the product.  Each product has an unconditional 30 day warranty, during which time the product can be returned for a complete refund.  Customers can purchase extended warranties, which provide for replacement or repair of the unit beyond the period provided by the unconditional warranty.

During 2017 and 2018, the Company did not sell it's products or installation and training, but rather only sold extended warranties on its'existing installed units.  Warranties can be purchased for various periods but generally they are for one year period that begins after any other warranties expire.  Under the new guidance, there is no change in our revenue recognition for extended warranty as compared to revenue recognition for these transactions under the prior revenue recognition standards. The Company recognizes revenue from extended warranty ratably over the warranty period.

For our Medical Business, service revenue is considered earned when the service is provided.

Property and Equipment

Property and Equipment

Property and equipment is recorded at cost and depreciated over their useful lives, using the straight-line and accelerated depreciation methods.  Upon sale or retirement, the cost and related accumulated depreciation are eliminated from the respective accounts, and the resulting gain or loss is included in the results of operations.  The useful lives of property and equipment for purposes of computing depreciation are as follows:

Equipment 5-7 years

Software tools 3 years

Repairs and maintenance charges which do not increase the useful lives of assets are charged to operations as incurred.  Depreciation expense for the periods ended September 30, 2018 and 2017 amounted to $600 and $600, respectively.

Income Taxes

Income Taxes

Income taxes are recorded under the assets and liabilities method whereby deferred tax assets and liabilities are recognized for the future tax consequences, measured by enacted tax rates, attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the rate change becomes effective.  Valuation allowances are recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized.

The Company files income tax returns in the U.S. federal jurisdictions, and in various state jurisdictions.  The Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years prior to 2010.  The Company policy is to recognize interest related to unrecognized tax benefits as income tax expense.  The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.

Research and Development

Research and Development

Research and development costs are expensed as incurred.

Advertising

Advertising

Advertising costs are charged to operations as incurred.  Advertising costs for the periods ended September 30, 2018 and 2017 were $25 and $3,322, respectively.

Nonmonetary Transactions

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

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

Stock-Based Compensation

The Company accounts for share-based compensation at fair value.  Share-based compensation cost for stock options granted to employees, board members and service providers is determined at the grant date using an option pricing model that uses level 3 unobservable inputs.  The value of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service period.

Net Loss Per Common Share

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss available to common stockholder by the weighted average number of common shares outstanding.  Diluted net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares and dilutive potential common share equivalents then outstanding.  Potential common shares consist of shares issuable upon the exercise of stock options and warrants in addition to shares that may be issued in the event that convertible debt is exchanged for shares of common stock.  The calculation of the net loss per share available to common stockholders for the periods ended September 30, 2018 and 2017 does not include potential shares of common stock equivalents, as their impact would be antidilutive.  The following reconciles amounts reported in the financial statements:

				Weighted Avg
	(Loss)			Shares		Per-share
	(Numerator)			(Denominator)		Amount
Period ended September 30, 2018
Loss from operations which is the amount
that is available to common stockholders	$	1.093,005			326,705,526	$	(0.00	)
Period ended September 30, 2017
Loss from operations which is the amount
that is available to common stockholders	$	(149,248	)		326,705,526	$	(0.00	)

 

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Net Loss Per Common Share

				Weighted Avg
	(Loss)			Shares		Per-share
	(Numerator)			(Denominator)		Amount
Period ended September 30, 2018
Loss from operations which is the amount
that is available to common stockholders	$	1.093,005			326,705,526	$	(0.00	)
Period ended September 30, 2017
Loss from operations which is the amount
that is available to common stockholders	$	(149,248	)		326,705,526	$	(0.00	)

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NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Notes Payable

	2018			2017
Stockholder 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
Auctus Fund, LLC  (see Note 13 re: derivative liability) Convertible promissory note dated June 22, 2018 with interest at 12% per annum with a nine month maturity date.  At any time prior to the complete satisfaction of the Note, the Note shall be convertible into shares of the Company's common stock		40,000
Auctus Fund, LLC  (see Note 13 re: derivative liability) Convertible promissory note dated January 12, 2018 with interest at 12% per annum with a nine month maturity date.  At any time prior to the complete satisfaction of the Note, the Note shall be convertible into shares of the Company's common stock.		53,000			-
Discount on convertible note		(22,520	)		-
TOTAL	$	120,480		$	50,000

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STOCK BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options

				Weighted		Weighted Average		Aggregate
	Number of			Average Exercise		Remaining		Intrinsic
	Options			Price		Contractual Life		Value
Outstanding at December 31, 2017		10,000,000		$	0.03		50	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		-			-		-		-
Expired		(10,000,000	)
Outstanding at September 30, 2018		-		$	0.00		25	$	-
Exercisable at September 30, 2018		-		$	0.00		-	$	-

Assumptions Used

Annual Dividend
Expected Life (in years)	5.00
Risk-Free Interest Rate	0.78	%
Expected Volatility	325.25	%

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DERIVATIVE INSTRUMENT (Tables)

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liability

Beginning balance, January 1, 2018	$	-
Additional issuance		53,000
Exercised/converted		-
Reclassification to equity		-
Change in value of derivative liability		79,870
Fair value, September 30, 2018	$	132,870

Black-Scholes derivative liability

Expected life	9 months
Stock price volatility		220	%
Annual risk-free interest rate		1.5	%
Expected dividends	None

Fair Value

Description	Fair Value Measurements at September 30, 2018 Using Fair Value Hierarchy
	Total			Level 1			Level 2			Level 3
Derivative liability		$	96,000		$	-		$	-		$	96,000
Total		$	96,0000		$	-		$	-		$	96,000

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Accounting Policies [Abstract]
Depreciation Expense	$ 600	$ 600
Advertising Costs	$ 25	$ 3,322

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Net Loss Per Common Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Accounting Policies [Abstract]
Net Loss	$ 176,995	$ (43,610)	$ 1,093,005	$ (149,248)
Shares			326,705,526	326,705,526
Per-share			$ (0.00)	$ (0.00)

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GOING CONCERN (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Loss from continuing operations	$ (18,556)	$ (68,805)	$ (26,443)	$ (125,298)
Debt in Default	$ 50,000		$ 50,000

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NOTES PAYABLE (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Notes payable	$ 112,114	$ 50,000
Discount on convertible note	(22,520)
Stockholder [Member]
Notes payable	$ 50,000	$ 50,000
Due date	Dec. 17, 2009
Interest rate	5.00%
Auctus Fund 1 [Member]
Notes payable	$ 40,000
Due date	Jun. 22, 2018
Interest rate	12.00%
Auctus Fund 2 [Member]
Notes payable	$ 53,000
Due date	Jan. 12, 2018
Interest rate	12.00%

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INCOME TAXES (Details Narrative)	9 Months Ended
	Sep. 30, 2018 USD ($)
Income Tax Disclosure [Abstract]
Net operating loss carryforwards	$ 28,308,000
Expiration date	Dec. 31, 2017
Tax Rate	35.00%
Reduced Tax Rate	21.00%
Reduced the deferred tax asset	$ 3,680,000

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CONVERTIBLE PREFERRED STOCK (Details Narrative) - $ / shares	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Equity [Abstract]
Preferred Stock Shares Outstanding	5,589,647
Common Stock Shares Par Value	$ 0.001	$ 0.001
Conversion Ratio	<div><div><div style="font: bold 10pt Times New Roman, Times, serif; text-align: left"><div style="font: normal 10pt Times New Roman, Times, serif; text-align: justify; text-indent: 36pt">15:1.</div></div></div></div>

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OPERATING LEASE (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Leases [Abstract]
Monthly Rent	$ 1,842
Rent Expense	$ 23,724	$ 10,776

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STOCK BASED COMPENSATION (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2011	Dec. 31, 2010
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares for Equity Incentive Plan			50,000,000
Shares issued For Expenses and Liabilitites	7,000,000	14,116,433
Amount of Expenses and Liabilities	$ 16,800	$ 92,065

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STOCK BASED COMPENSATION - Stock Options (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Stock Based Compensation - Stock Options
Stock options, outstanding, beginning | shares	10,000,000
Stock options, forfeited | shares	10,000,000
Stock options per share, outstanding, beginning	$ 0.03
Stock options per share, outstanding, ending	0.00
Stock options per share, exercisable	$ 0.00
Stock options contractual life, outstanding, beginning	5 months
Stock options contractual life,outstanding, ending	2 months 5 days

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STOCK BASED COMPENSATION - Assumptions Used (Details)	9 Months Ended
	Sep. 30, 2018
Share-based Compensation [Abstract]
Annual Dividend
Expected Life (in years)	5 years
Risk Free Interest Rate	7.80%
Expected Volatility	325.25%

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Related Party Transactions [Abstract]
Due to Shareholders	$ 19,118
Net Proceeds from Stockholders	44,771
Forgiven debt	301,354
Loans from stockholders	$ 266,512	$ 584,136	$ 637,034

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ISSUABLE COMMON STOCK (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Issuable Common Stock
Common stock issuable, shares	740,000		740,000
Common stock issuable	$ 16,000	$ 16,000	$ 16,000

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CONTINGENT LIABILITY (Details)	9 Months Ended
	Sep. 30, 2018 USD ($)
Contingent Liability Details Abstract
Salary	$ 120,000

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DERIVATIVE INSTRUMENT - Derivative Liability (Details)	9 Months Ended
	Sep. 30, 2018 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Beginning balance, January 1, 2018
Additional issuance	53,000
Exercised/converted
Reclassification to equity
Change in value of derivative liability	79,870
Fair value, September 30, 2018	$ 132,870

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DERIVATIVE INSTRUMENT - Derivative Liability Black Scholes Method (Details)	9 Months Ended
	Sep. 30, 2018 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Expected Life (in years)	9 years
Stock price volatility	220.00%
Annual risk-free interest rate	1.50%
Expected dividends

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DERIVATIVE INSTRUMENT - Fair Value (Details) - USD ($)	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Derivative liability	$ 132,870
Level 1 [Member]
Derivative liability
Level 2 [Member]
Derivative liability
Level 3 [Member]
Derivative liability	$ 132,870	$ 96,000