10KSB/A 1 edg0829.txt VIEW SYTEMS, INC. FORM 10KSB/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 10-KSB/A [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended DECEMBER 31, 2000 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ___________ to __________ Commission file number: __________ View Systems, Inc. ----------------------- (Name of Small Business Issuer in Its Charter) Florida 59-2928366 --------------------------------------- ---------------------------- (State or Other Jurisdiction (I.R.S. Employer Identification No of Incorporation or Organization) 925 West Kenyon Avenue, Englewood, Colorado 80110 --------------------------------------- ---------------------------- (Address of principal executive offices) (Zip Code) (303)783-9153 ----------------------------------------- (Issuer's Telephone Number, Including Area Code) Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.001 par value. -------------------------- (Title of class) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ___X___ No _______ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] The Registrant's revenue for the fiscal year ended December 31, 2000 was $661,789. As of March 29, 2001, 12,322,620 shares of the registrant's Common Stock were outstanding and the aggregate market value of such Common Stock held by non-affiliates was approximately $6,531,000 based on the closing price of $.53 per share on that date. This 10-KSB/A is being filed by View Systems, Inc. (the "Company") to amend Paragraph 5 of Note 1 of the Notes to the Financial Statements of the Company. Index To Financial Statements View Systems, Inc Page No. --------- Independent Auditors' Report F-1 Consolidated Balance Sheet at December 31, 2000 F-2 Consolidated Statements of Operations for the F-3 years ended December 31, 2000 and 1999 Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2000 and 1999 F-4 Consolidated Statements of Cash Flows for the years ended December 31, 2000 and 1999 F-5 Notes to Consolidated Financial Statements F-7 Index To Financial Statements Eastern Tech Manufacturing Corp. Page No. --------- Independent Auditors' Report G-1 Balance Sheet at June 30, 1998 G-2 Statements of Operations and Retained Earnings for the years ended June 30, 1998 and 1997 G-3 Statements of Cash Flows for the years ended June 30, 1998 and 1997 G-4 Notes to Financial Statements G-5 Balance Sheet at March 31, 1999 (unaudited) G-7 Statements of Operations for the Nine Months Ended March 31, 1999 and 1998 (unaudited) G-8 Statements of Cash Flow for the Nine Months Ended March 31, 1999 and 1 1998 (unaudited) G-9 Index To Financial Statements Xyros Systems, Inc Page No. -------- Independent Auditors' Report H-1 Balance Sheet at December 31, 1998 H-2 Statements of Operations and Accumulated Deficit for the years ended December 31, 1998 and 1997 H-3 Statements of Cash Flows for the years ended December 31, 1999 and 1998 H-4 Notes to Financial Statements H-5 2 The Board of Directors and Stockholders View Systems Inc. Columbia, Maryland We have audited the accompanying consolidated balance sheet of View Systems Inc. and Subsidiaries (the Company) as of December 3l, 2000 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the years ended December 3l, 2000 and 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the accompanying consolidated balance sheet as of December 31, 2000 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the years ended December 3l, 2000 and 1999 present fairly, in all material respects, the financial position of the Company as of December 31, 2000 and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. /S/ Stegman & Company ----------------------- Stegman & Company Baltimore, Maryland March 15, 2001 F-1 VIEW SYSTEMS, INC. CONSOLIDATED BALANCE SHEET DECEMBER 31, 2000 ASSETS CURRENT ASSETS: Cash $ 265,245 Accounts receivable (net) 155,017 Inventory 95,339 ----------- Total current assets 515,601 ----------- PROPERTY AND EQUIPMENT: Equipment 323,766 Leasehold improvements 20,261 Software tools 15,071 Vehicles 43,772 ----------- 402,870 Less accumulated depreciation 79,814 ----------- Net value of property and equipment 323,056 ----------- OTHER ASSETS: Goodwill 894,383 Investments 28,000 Due from affiliated entities 105,552 Due from affiliate 20,000 Deposits 832 ----------- Total other assets 1,048,767 ----------- TOTAL ASSETS $1,887,424 ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 401,247 Note payable - bank 42,083 Accrued interest 22,000 Notes payable - other 110,000 Due to Stockholder 2,090 Payroll liabilities 31,951 ------- Total current liabilities 609,371 ------- STOCKHOLDERS' EQUITY: Common stock - par value $.01, 50,000,000 shares authorized, Issued and outstanding - 11,481,031 shares 11,481 Additional paid-in capital 7,364,502 Accumulated deficit (6,097,930) ---------- Total stockholders' equity 1,278,053 --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,887,424 ========== See accompanying notes F - 2 VIEW SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
2000 1999 ---- ---- REVENUE: Sales of contract assembly services $ 319,376 $ 303,711 Sales of assembled electronic components 342,413 - -------- ------- Total sales 661,789 303,711 Cost of goods sold 436,310 258,378 ----------- ------- GROSS PROFIT ON SALES 225,479 45,333 ----------- ------- OPERATING EXPENSES: Advertising and promotion 20,931 23,256 Amortization 113,135 95,299 Bad debts 14,010 - Business development expense 133,393 140,000 Contributions 10,347 2,500 Depreciation 44,765 29,856 Dues and subscriptions 2,573 3,379 Employee compensation and benefits 794,166 2,045,531 Impairment loss of goodwill and other intangible assets - 244,155 Insurance 21,088 17,038 Interest 23,338 51,262 Investor relations 392,136 212,086 Miscellaneous expenses 13,692 19,445 Office expenses 94,846 69,989 Professional fees 359,131 317,100 Rent 121,951 74,228 Repairs and maintenance 9,148 10,167 Research and development 132,300 210,143 Taxes (other than income) 5,249 3,201 Telephone 35,807 28,398 Travel 72,851 105,813 Utilities 14,904 13,383 ------ ------- Total operating expenses 2,429,761 3,716,229 ---------- ---------- NET LOSS FOR THE YEAR $(2,204,282) $(3,670,896) =========== =========== LOSS PER SHARE: Basic $( 0.19) $( 0.63) ============== =========== Diluted $( 0.19) $( 0.63) ============== =========== See accompanying notes
F - 3 VIEW SYSTEMS, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
Additional Total Common Paid-In Accumulated Stockholders' Stock Capital Deficit Equity ------ ---------- ----------- ------------- Balances at January 1, 1999 $ 4,167 $ 406,253 $( 222,752) $ 187,668 Sale of common stock 952 1,425,377 - 1,426,329 Redemption of common stock ( 191) ( 396,590) - ( 396,781) Issuance of common stock employee (other compensation) 1,469 2,145,864 - 2,147,333 Issuance of common stock (Xyros acquisitions) 150 562,350 - 562,500 Issuance of common stock (ETMC acquisitions) 250 787,250 - 787,500 Issuance of common stock (debt conversion) 370 403,838 - 404,208 Net loss for the year ended December 31, 1999 - - (3,670,896) ( 3,670,896) ---------- ---------- ----------- ----------- Balances at December 31, 1999 7,167 5,334,342 (3,893,648) 1,447,861 Sales of common stock 2,843 1,448,097 - 1,450,940 Stock options exercised 88 894 - 982 Issuance of common stock (employee and other compensation) 1,383 581,169 - 582,552 Net loss for the year ended December 31, 2000 - - (2,204,282) ( 2,204,282) --------- ---------- --------- ---------- Balances at December 31, 2000 $ 11,481 $7,364,502 $(6,097,930) $ 1,278,053 ======== ========== =========== ============ See accompanying notes
F - 4 VIEW SYSTEMS, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
2000 1999 ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(2,204,282) $( 3,670,896) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 157 ,900 125,155 Improvement loss of goodwill and other intangible assets - 244,155 Employee and other compensation paid through the issuance of common stock 582,552 2,147,333 Employee compensation related to stock options granted - 87,420 Interest paid through issuance of common stock - 33,000 Changes in operating assets and liabilities: Accounts receivable ( 61,739) ( 93,278) Inventory 45,874 ( 141,213) Other assets 6,175 ( 6,571) Accounts payable 227,141 150,333 Accrued interest 11,000 11,000 Payroll taxes payable 12,788 19,163 ------------ ---------- Net cash used by operating activities ( 1,222,591) ( 1,094,399) ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 67,479) ( 50,354) Funds advanced to affiliated entities ( 14,562) ( 459,180) Investment in MediaComm Broadcasting Systems, Inc. ( - ) ( 28,000) ------------- ----------- Net cash used in investing activities ( 82,041) ( 537,534) ------------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans provided by stockholders 56,452 132,071 Repayment of note payable-bank ( 27,647) ( 5,270) Proceeds from sales of stock 1,451,922 1,426,329 ----------- ----------- Net cash provided by financing activities 1,480,727 1,553,130 ----------- ---------- NET INCREASE( DECREASE) IN CASH 176,095 ( 78,803) CASH AT BEGINNING OF YEAR 89,150 167,953 ----------- ----------- CASH AT END OF YEAR $ 265,245 $ 89,150 =========== ============ See accompanying notes
F - 5 VIEW SYSTEMS, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (Continued)
2000 1999 -------- -------- Schedule of noncash investing and financing transactions: Common stock issued to effect purchase of Eastern Tech Manufacturing, Inc. $ - $ 787,500 ============ ========== Debt issued to effect purchase of Eastern Tech Manufacturing, Inc. $ - $ 148,184 ============ ========== Common stock issued for to effect purchase of Xyros Systems, Inc. $ - $ 562,500 ============ ========== Common stock issued for conversion of debt $ - $ 404,208 ============ ========== Common stock redeemed in exchange for receivable $ - $ 396,781 ============ ========== Cash paid during the period for: Interest $ 12,338 $ 45,379 =========== ========== Income taxes $ - $ - ============ ==========
F - 6 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations View Systems, Inc. (the "Company") designs and develops computer software and hardware used in conjunction with surveillance capabilities. The technology utilizes the compression and decompression of digital inputs. Operations, from formation to June 30, 1999, were devoted primarily to raising capital, developing the technology, promotion, and administrative function. As of July 1, 1999 the Company was no longer considered to be in the development stage. Basis of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Real View Systems, Inc. ("Real View"), Xyros Systems, Inc. ("Xyros") and Eastern Tech Manufacturing, Inc. ("ETMC"). 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. 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. Revenue Recognition The Company and its subsidiaries recognize revenue and the related cost of goods sold upon shipment of the product. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements". SAB 101 summarizes certain of the SEC's views in applying accounting principles generally accepted in the United States to revenue recognition in financial statements. The Company adopted SAB 101 in the fourth quarter of 2000. The adoption of SAB 101 had no impact on the Company's financial position or results of operations. Inventories Inventories are stated at the lower of cost or market. Cost is determined by the last-in-first-out method (LIFO). F - 7 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Property and Equipment Property and equipment is recorded at cost and depreciated over their estimated 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 or 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 years ended December 31, 2000 and 1999 amounted to $44,765 and $29,856 respectively. Impairment of Long-Lived Assets Long-lived assets and identifiable intangibles (including goodwill) to be held and used are reviewed for Impairment whenever events or changes in circumstances indicate that the carrying amount should be addressed. Impairment is measured by comparing the carrying value to the estimated undiscounted future cash flows expected to result from use of the assets and their eventual disposition. Income Taxes Deferred income taxes are recorded under the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences, measured by enacted tax rates, attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. 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. Research and Development Research and development costs are expensed as incurred. Equipment and facilities acquired for research and development activities that have alternative future uses are capitalized and charged to expense over the estimated useful lives. Advertising Advertising costs are charged to operations as incurred. Advertising costs for the years ended December 31, 2000 and 1999 were $20,931 and $23,256, respectively. Nonmonetary Transactions Nonmonetary transactions are accounted for in accordance with Accounting Principles Board Opinion No. 29 Accounting for 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. F - 8 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 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. Net Loss Per Common Share Basic net loss per common share ("Basic EPS") is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share ("Diluted EPS") 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. The calculation of the net loss per share available to common stockholders for the years ended December 31, 2000 and 1999 does not include potential shares of common stock equivalents, as their impact would be antidilutive. Segment Reporting The company has determined that it does not have any separately reportable operating segments for the years ended December 31, 2000 and 1999. 2. FINANCIAL CONDITION AND MANAGEMENT'S PLAN The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplates continuation of the Company as a going-concern. However, the Company has sustained significant operating losses in the past two years. In addition, the Company has used substantial amounts of working capital in its operations. As of December 31, 2000 and for the year then ended, the Company had an accumulated deficit of $6.1 million and a net loss of $2.2 million. Further, as of December 31, 2000 current liabilities exceed current assets by $93,770. There can be no assurance that the Company will be able to generate sufficient revenues to achieve or sustain profitability in the future. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the ability to meet it financing requirements, and the success of its future operations. Management has undertaken a vigorous effort to reduce both cost of sales and other operating expenses. Additionally, management is attempting to raise additional funds through the exercise of outstanding common stock warrants. Management believes the actions presently being taken to revise the Company's operating and financial requirements provide the opportunity for the Company to continue as a going concern. 3. BUSINESS COMBINATIONS On February 25, 1999, the Company acquired Xyros Systems Inc. of Columbia, Maryland, a developer of computer based systems and equipment that captures video and audio data and transmits and stores it within standard personal computer systems. Under the terms of the merger agreement, each of the 100 shares of Xyros's common stock was exchanged for 1,500 shares of the Company's common stock. This acquisition was accounted for as a purchase. F - 9 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 In May of 1999, the Company completed its acquisition of ETMC, a computer parts and accessories manufacturer. The business combination was accounted for as a purchase in which each outstanding share of ETMC common stock was converted into the right to receive shares of the Company. At closing, the purchase price (as defined in the agreement and plan of merger) of $935,684 was paid by the issuance of 250,000 shares of common stock and the assumption of liabilities for both legal fees and a non-compete clause. The excess cost over net liabilities acquired of $495,344 was recorded as goodwill. 4. INVENTORY Inventories at December 31, 2000 consisted of the following: Work in process 43,835 Raw materials 51,504 ---------- $ 95,339 ========== DUE FROM AFFILIATED ENTITY The Company has advanced non-interest bearing funds of $105,552 as of December 31, 2000 to a related corporation, View Technologies, Inc. which is controlled by the Chief Executive Officer of the Company. There are no formal repayment terms associated with this advance. The two companies enter into various transactions throughout the year to provide working capital to one another when necessary. 5. DUE FROM AFFILIATE The Company has advanced non-interest bearing funds to its Chief Executive Officer in the amount of $20,000 as of December 31, 2000. There are no repayment terms associated with this advance. 7. INVESTMENTS The Company owns approximately 14% of the common stock of a privately held entity known as MediaComm Broadcasting Systems, Inc., which is a development stage company formed to generate revenue through internet retail sales. There is no market for the entity's common shares, and it was impracticable to estimate fair value of the Company's investment. The investment is carried on the balance sheet at original cost of $28,000 or $.03 a share. F - 10 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 8. INTANGIBLE ASSETS In relation to the business combination with ETMC accounted for under the purchase method of accounting, the Company recorded goodwill in the amount of $495,344. This amount was based on the difference between the fair market value of the Company's stock at the acquisition date and the fair value of ETMC's net assets. During the fourth quarter of 1999, management conducted a thorough review of ETMC's operations, including customer base, current production capacity, and job order backlog. Based on this review, the Company recognized an impairment loss in the amount of $199,009. The remaining goodwill is being amortized over a 10 year period, beginning at the acquisition date. In relation to the business combination with Xyros accounted for under the purchase method of accounting, the Company recorded goodwill in the amount $802,069. This amount was based on the difference between the fair market value of the Company's stock at the acquisition date and the fair market value of Xyros's net assets and is being amortized on a straight-line basis over a ten year period. Software development costs of $47,146 relating to internal costs associated with a software product that the Company will not market were also written-off to expense during 1999. 9. NOTE PAYABLE - BANK One of the Company's subsidiaries has a note payable with a bank having an outstanding balance of $42,083 as of December 31, 2000. The note bears interest equivalent to the prime rate plus 2% annum payable monthly and is personally guaranteed by three stockholders and former officers of the Company. The Company is obligated to make monthly principal payments of $5,000. 10. NOTE PAYABLE - OTHERS In connection with the acquisition of Xyros, the Company assumed liabilities evidenced by notes payable to the stockholders of Xyros. The notes carry an annual interest rate of 10% with interest paid monthly. The notes were originally due December 31, 1999, but the Company has renegotiated the terms of the loan to allow for repayment as cash flow permits. 11. INCOME TAXES The components of the net deferred tax asset and liability as of December 31, 2000 are as follows: Effect of net operating loss carryforward $ 2,090,000 Less valuation allowance $( 2,090,000) ------------ Net deferred tax asset (liability) $ - ============ F - 11 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 12. STOCK-BASED COMPENSATION During the years ended December 31, 2000 and 1999 the Company granted restricted stock, incentive stock options, non-qualified stock options, and warrants to employees, officers, independent consultants and investors. Restricted Stock Grants The Company's Board of Directors and stockholders have approved a restricted share plan under which shares of the Company's common stock will be granted to employees, officers, and directors at the discretion of the Board of Directors. During 2000 and 1999 the Company issued the following shares under this Plan and additional shares at the direction of the Board of Directors:
2000 1999 -------------------------- -------------------------------- Number Expense Number Expense of Shares Recognized of Shares Recognized --------- ---------- --------- ---------- Officers and employees 580,000 $ 266,927 1,100,000 $1,755,000 Consultants 803,000 156,125 369,000 392,333 ------- ---------- --------- --------- 1,383,000 $ 423,052 1,469,000 $2,147,333 ========= ========= ========= ==========
The recognition of expense was based on the fair market value of the common stock issued on the date of the grant. Stock Options and Warrants The Company adopted the 1999 Stock Option Plan during 1999. The Plan reserves 4,500,000 shares of the Company's unissued common stock for options. 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 price as established on the date of grant. F - 12 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 A summary of the Company's stock option activity and related information for the years ended December 31, 2000 and 1999 is as follows:
2000 --------------------------------------------------------- Common Weighted Stock Average Range of Options Exercise Price Exercise Prices ------- -------------- --------------- Outstanding at beginning of year 504,860 $1.56 $0.01-$2.07 Granted - - - Exercised (87,250) .01 .01 Expired/cancelled (309,920) 2.00 2.00 ------- Outstanding at end of year 107,690 $1.63 $0.01-$2.07 ======= 1999 ----------------------------------------------------------- Common Weighted Stock Average Range of Options Exercise Price Exercise Price ------- -------------- -------------- Outstanding at beginning of year - $ - $ - Granted 504,860 l.56 0.01-2.07 Exercised - - - Expired/cancelled ------- - - Outstanding at end of year 504,860 $1.56 $0.01-$2.07 ======= All options issued are immediately exercisable. The Company has issued warrants to purchase the Company's common stock as follows: 2000 -------------------------------------------------------------- Common Weighted Stock Average Range of Warrants Exercise Price Exercise Prices -------- -------------- --------------- Outstanding at beginning of year 454,000 $2.00 $2.00 Granted 3,200,000 1.85 .50-2.25 Exercised ( 665,000) .50 .50 Expired/cancelled - - - --------- Outstanding at end of year 2,989,000 $1.97 $1.25-2.25 =========
F - 13 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
1999 ------------------------------------------------ Common Weighted Stock Average Range of Warrants Exercise Price Exercise Prices -------- -------------- -------------- Outstanding at beginning of year - $ - $ - Granted 454,000 2.00 2.00 Exercised - - - Expired/cancelled - - - ------- Outstanding at end of year 454,000 $2.00 $2.00 =======
During January, 2001 the company cancelled 2,235,000 warrants with an exercise price of $2.00 per share due to non-performance of the warrant holder. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123; Accounting for Stock-Based Compensation (SFAS No. 123), but applies Accounting Principle Board Opinion No. 25 and related interpretations. The fair value of these equity awards was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 1999: risk-free interest rate of 5.97% - 6.09%; expected volatility of 70.0%; expected option life of 2 years from vesting and an expected dividend yield of 0.0%. If the Company had elected to recognize cost based on the fair value at the grant dates consistent with the method prescribed by SFAS No. 123, net loss and loss share would have been changed to the pro forma amounts for the year ended December 31, 1999 as follows: Net income - as reported $ (3,670,896) Net income - pro forma (3,937,524) Net income per share - as reported $ (0.63) Net income per share - pro forma (0.68) There were no stock options granted during the year ended December 31, 2000. 13. RELATED PARTY TRANSACTIONS During the year ended December 31, 1999 the Company redeemed 59,860 shares owed by the Chief Executive Officer for $50,000 in cash and the elimination of $67,719 due to the Chief Executive Officer for a total consideration for $117,719 During the year ended December 31, 1999 the Company converted a note payable and related accrued interest to a family member of the Chief Executive Officer in the amount of $200,000 to 200,000 share of the Company's common stock. F - 14 14. CONCENTRATION OF CREDIT RISK The Company maintains a checking account in a commercial bank. Cash in this checking account at times exceeded $100,000. The checking account is insured by the Federal Deposit Insurance Corporation up to $100,000. F - 15 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Eastern Tech Manufacturing Corporation We have audited the accompanying balance sheets of Eastern Tech Manufacturing Corporation as of June 30, 1998 and 1997 and the related statements of operations and retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Eastern Tech Manufacturing Corporation as of June 30, 1998 and 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Davis, Sita & Company September 8, 2001 G - 1 EASTERN TECH MANUFACTURING CORPORATION BALANCE SHEET JUNE 30, 1998 AND 1997 ASSETS 1998 1997 ---- ---- CURRENT ASSETS: -------------- Cash $8,970 $6,538 Accounts receivable 33,138 71,590 Prepaid expenses 1,669 - ----- - Total current assets 43,777 78,128 ------ ------ PROPERTY AND EQUIPMENT: ---------------------- Equipment, at cost 154,935 141,571 Less accumulated depreciation 83,879 81,970 ------ ------ Cost less accumulated depreciation 71,056 59,601 ------ ------ TOTAL ASSETS $114,833 $137,729 ======== ======== LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: ------------------- Accounts payable $48,807 $67,961 Loans from stockholder 42,953 42,953 ------ ------ Total current liabilities 91,760 110,914 ------ ------- STOCKHOLDER'S EQUITY: -------------------- Common stock - par value $1.00 500 shares authorized, issued and outstanding 500 500 Retained earnings 22,573 26,315 ------ ------ Total stockholder's equity 23,073 26,815 ------ ------ TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $114,833 $137,729 ======== ======== See Notes To Financial Statements G - 2 EASTERN TECH MANUFACTURING CORPORATION STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
1998 1997 ---- ---- REVENUE: Sales of assembled electronic components $820,683 $1,942,563 -------- ---------- COST OF SALES: ------------- Material 484,961 1,307,755 Labor 175,379 310,205 ------- ------- Cost of sales 660,340 1,617,960 ------- --------- Gross profit 160,343 324,603 ------- ------- OPERATING EXPENSES: ------------------ Salaries and benefits 43,844 61,480 Rent 43,029 101,015 Taxes (principally payroll) 26,981 42,144 Other operating expenses 25,683 88,895 Insurance 22,639 23,507 Depreciation 1,909 5,758 ----- ----- Total operating expenses 164,085 322,799 ------- ------- NET INCOME (LOSS) FOR THE YEAR (3,742) 1,804 RETAINED EARNINGS, BEGINNING OF YEAR 26,315 24,511 ------ ------ RETAINED EARNINGS, END OF YEAR $22,573 $ 26,315 ======= ======== See Notes To Financial Statements
G - 3 EASTERN TECH MANUFACTURING CORPORATION STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: ------------------------------------ Net income (loss) $(3,742) $1,804 Adjustments to reconcile net income to net cast provided by operating activities: Depreciation 1,909 5,758 Changes in operating assets and liabilities: Accounts receivable 38,452 - Prepaid expenses (1,669) - Accounts payable (19,154) (44,762) -------- ------- Net cash provided by (used in) operating activities 15,796 (37,200) ------ ------- CASH FLOWS FROM INVESTING ACTIVITIES: ------------------------------------ Purchase of property and equipment (13,364) (31,883) CASH FLOWS FROM FINANCING ACTIVITIES: ------------------------------------ Funds advanced (to) from stockholders - 40,725 - ------ NET INCREASE (DECREASE) IN CASH 2,432 (28,358) CASH AT BEGINNING OF PERIOD 6,538 34,896 ----- ------ CASH AT END OF PERIOD $8,970 $6,538 ====== ======
G - 4 EASTERN TECH MANUFACTURING CORPORATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 AND 1997 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Eastern Tech Manufacturing Corporation (The "Company") is a Maryland corporation organized in May 1985. The Company is engaged in the business of assembling electronic components under various short-term, task oriented contracts and purchase orders. Method of Accounting The financial statements of the Company have been prepared on the accrual basis of accounting. Under this method, certain revenues are recognized when earned, and certain expense and purchases of assets are recognized when the obligations if incurred. Management's Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition The Company recognizes revenue and the related cost of goods sold upon shipment of the product. Accounts Receivable Management reflects as accounts receivable only those accounts which it considers to be collectable. Uncollectable accounts are written off when collection is in doubt. Property and Equipment Property and equipment are stated at cost. Depreciation is computed under accelerated methods with useful lives ranging from 5 to 7 years. Expenditures for major renewals and betterments which extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. 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. Income Taxes The Company is subject to Federal and state corporate income taxes on its net taxable income. As of June 30, 1998 the Company owed no Federal or state income taxes. NOTE 2 - LOANS FROM STOCKHOLDER At June 30, 1998 and 1997, the Company had borrowed $42,953 from its principal stockholder. The loans are unsecured and payable on demand. There is no provision for interest. NOTE 3 - RELATED PARTY TRANSACTIONS The Company leased its office and manufacturing facility from its principal stockholder under a month-to-month arrangement. Rent paid to the stockholder amounted to $43,029 for the year ended June 30, 1998 and $101,015 for the year ended June 30, 1997. G - 5 NOTE 4 - SUBSEQUENT EVENT During May 1999 all of the Company's outstanding common stock was purchased by View Systems, Inc. for $935,684. The purchase price was paid for with 250,000 shares of View's common stock. The transaction also included the assumption of various liabilities and legal fees by View as well as a non-compete clause. G - 5 EASTERN TECH MANUFACTURING CORPORATION BALANCE SHEET MARCH 31, 1999 (UNAUDITED) ASSETS CURRENT ASSETS: Cash $9,537 Accounts receivable 35,261 Inventory 30,210 ------ Total current assets 75,008 ------ PROPERTY AND EQUIPMENT: Equipment, at cost 154,935 Less accumulated depreciation 86,874 ------ Net value of equipment 68,061 ------ TOTAL ASSETS $143,069 ======= LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Accounts payable $15,076 Loans from stockholder 101,816 Other accrued liabilities 3,350 ----- Total current liabilities 120,242 ------- STOCKHOLDER'S EQUITY Common Stock - par value $1. 00, 1000 shares authorized, 100 shares issued and outstanding 500 Retained earnings 22,327 ------ Total stockholder's equity 22,827 ------ TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $143,069 ======== G - 6 EASTERN TECH MANUFACTURING CORPORATION STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
1999 1998 ---- ---- (unaudited) (unaudited) REVENUE: Sales of assembled electronic components $716,250 $615,512 -------- -------- COST OF SALES: Material 423,089 363,721 Labor 197,651 131,534 ------- ------- Cost of sales 620,740 495,255 ------- ------- Gross profit 95,510 120,257 ------ ------- OPERATING EXPENSES: Salaries and benefits 20,977 35,250 Rent 28,000 30,576 Payroll and other taxes 20,236 22,420 Other operating expenses 26,543 34,298 ------ ------ Total operating expenses 95,756 122,544 ------ ------- NET LOSS (246) (2,287) RETAINED EARNINGS AT BEGINNING OF PERIOD 22,573 26,315 ------ ------ RETAINED EARNINGS AT END OF PERIOD $22,327 $24,028 ======= =======
G - 8 EASTERN TECH MANUFACTURING CORPORATION STATEMENTS OF CASH FLOW FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
1999 1998 ---- ---- (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $(246) $(2,287) Adjustments to reconcile net (loss) income to net cash Provided by operating activities: Depreciation 2,995 1,432 Changes in operating assets and liabilities: Accounts receivable (2,123) 27,067 Inventory (30,210) - Prepaid expenses 1,669 - Accounts payable (33,731) (14,365) Other accrued liabilities 3,350 - ------ - (58,296) 11,847 -------- ------ CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment - 10,023 -------- ------ CASH FLOWS FROM FINANCING ACTIVITIES Funds advanced (to) from stockholder 58,863 - ------ ------ NET INCREASE (DECREASE) IN CASH 567 1,824 CASH AT BEGINNING OF PERIOD 8,970 6,538 ----- ----- CASH AT END OF PERIOD $9,537 $8,362 ====== ======
G - 9 To the Board of Directors and Stockholders Xyros Systems, Inc. Columbia, Maryland We have audited the accompanying balance sheet of Xyros Systems, Inc. as December 31, 1998 and the related statements of operations and accumulated deficit and cash flows for the years ended December 31, 1998 and 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Xyros Systems, Inc. as December 31, 1998, and the results of its operations and cash flows for the years ended December 31, 1998 and 1997 in conformity with generally accepted accounting principles. Stegman & Company Baltimore, Maryland July 20, 2001 H - 1 XYROS SYSTEMS, INC. BALANCE SHEET DECEMBER 31, 1998 ASSETS CURRENT ASSETS: Cash $ 1,946 Accounts receivable 13,599 Inventory 4,574 ----- Total current assets 20,119 ------ PROPERTY AND EQUIPMENT: Computer hardware 1,666 Software 2,438 ----- 4,104 Less accumulated depreciation (821) ----- Net value of property and equipment 3,283 ----- TOTAL ASSETS $ 23,402 =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 6,298 Note payable - bank 65,000 Notes payable - stockholders 155,000 Other accrued liabilities 2,915 ----------- Total current liabilities 229,213 ----------- STOCKHOLDERS' EQUITY Common Stock - par value $1.00, 1000 shares authorized, 100 shares issued and outstanding 100 Accumulated deficit (205,911) --------- Total stockholders' equity (205,811) --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,402 =========== See accompanying notes H - 2 XYROS SYSTEMS, INC. STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 1998 1997 ---- ---- REVENUE: Sales and other income $31,438 $- Cost of goods sold 20,891 -- ------ ---- GROSS PROFIT ON SALES 10,547 -- ------ ---- OPERATING EXPENSES: Advertising and promotion 2,819 -- Depreciation 821 -- Employee compensation and benefits 90,008 -- Insurance 826 -- Interest 9,837 -- Office expenses 16,426 2,147 Professional fees 1,529 9,717 Rent 35,879 -- Research and development expenses 22,077 16,387 Utilities 3,921 -- Travel 2,424 1,640 Total operating expenses 186,567 29,891 ------- ------ NET LOSS (176,020) (29,891) --------- ------- ACCUMULATED DEFICIT AT BEGINNING OF YEAR (29,891) -- ACCUMULATED DEFICIT AT END OF YEAR $(205,911) $(29,891) ========== ========= BASIC NET LOSS PER SHARE $(1,760.20) $(29,891) =========== ========= See accompanying notes H - 3 XYROS SYSTEMS, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(176,020) $(29,891) Adjustments to reconcile net loss to net cash used by operating activities - Depreciation 821 -- Changes in operating assets and liabilities: Accounts receivable (13,599) -- Inventory (4,574) -- Accounts payable 6,289 -- Other accrued liabilities 3,024 -- ----- -- Net cash used by operating activities (184,059) (29,891) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (4,104) -- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from bank note payable 65,000 -- Proceeds from stockholder notes payable 125,000 30,000 ------- ------ Net cash provided by financing activities 190,000 30,000 ------- ------ NET DECREASE IN CASH 1,837 109 CASH AT BEGINNING OF YEAR 109 -- --- - CASH AT END OF YEAR $1,946 $109 ======= ===== See accompanying notes.
H - 4 XYROS SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Xyros Systems, Inc. (the "Company") was incorporated in the State of Maryland on July 27, 1997. The Company designs and develops products which permit remote monitoring and storage of video. Use of Estimates Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. 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. Revenue Recognition The Company recognizes revenue and the related cost of goods sold upon shipment of the product. Inventories Inventories consist of parts and other materials and are stated at the lower of cost or market. Cost is determined by the first-in first-out method. Property and Equipment Property and equipment is recorded at cost and depreciated over their useful lives, using the straight- line method. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from the respective accounts, and the resulting gain or loss is included in the results of operations. The useful lives of property and equipment for purposes of computing depreciation is 5 years. Income Taxes Deferred income taxes are recorded under the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences, measured by enacted tax rates, attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry-forwards. Valuation allowances are recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized. H - 5 2. NOTE PAYABLE - BANK The Company has a demand note payable with a commercial bank having an outstanding balance of $65,000 at December 31, 1998. The note bears interest equivalent to the prime rate plus 2% per annum payable monthly and is personally guaranteed by the Company's stockholders. 3. NOTES PAYABLE - STOCKHOLDERS The Company has notes payable with its stockholders in the aggregate amount of $155,000 as of December 31, 1998. The notes carry an annual interest rate of 10% with interest payable monthly and are due December 31, 1999. 4. INCOME TAXES The components of the deferred income taxes as of December 31, 1998 consist of the following: Effect of net operating loss carry-forward $ 70,010 Less valuation allowance (70,010) Net deferred tax asset (liability) $ -- ========= The Company has recorded a valuation allowance in an amount equal to the deferred tax asset resulting from its net operating loss carry-forward. H - 6 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-KSB/A to be signed on its behalf by the undersigned hereunto duly authorized. VIEW SYSTEMS, INC. /s/Gunther Than ------------------------------------- June 21, 2001 Gunther Than, President and Chief Executive Officer EXHIBIT INDEX 2.1 View Systems, Inc. Board of Directors Resolutions approving Acquisition Agreement and Plan of Reorganization With RealView Systems, Inc; Resolution of stockholders and Board of Directors of Real View Systems, Inc. approving Acquisition Agreement and Plan of Reorganization With Real View Systems, Inc. (1) 2.2 View Systems, Inc. Board of Directors Resolutions approving Acquisition Agreement and Plan of Reorganization With RealView Systems, Inc; Resolution of stockholders and Board of Directors of Real View Systems, Inc. approving Acquisition Agreement and Plan of Reorganization With Real View Systems, Inc. (1) View Systems, Inc. Acquisition Agreement and Plan of Reorganization with Xyros Systems, Inc. (1) 2.3 View Systems, Inc. Acquisition Agreement and Plan of Reorganization with ETMC(1) 2.4 Letter of Intent to Form Joint Venture Corporation Between NetServ Caribbean, Ltd. and View Systems, Inc. (1) 3.1 Articles of Incorporation and all Articles of Amendment of View Systems, Inc. (1) 3.2 By-Laws of View Systems, Inc. (1) 10.1 Form of Subscription Agreement For 8/8/99 Rule 505 (Amended to Be Rule 506) Offering and Terms of Offering Pages From Private Placement Memorandum, Dated August 8, 1999, Describing Rights of Subscribers. (1) 10.2 Form of Subscription Agreement For 11/11/99 Rule 506 Offering and Terms of Offering Pages From Private Placement Memorandum, Dated November 11, 1999, Describing Rights of Subscribers. (1) 10.3 Subscription Agreement Between View Systems, Inc. and Lawrence Seiler for 170,000 Shares, Granting Registration Rights to 100,000 Shares. (1) 10.4 Lock-Up Agreement With Lawrence Seiler.(1) 10.5 Subscription Agreement Between View Systems, Inc. and Leokadia Than. (1) 10.6 Form of Subscription Agreement Between View Systems, Inc. and Jim Price and Tim Rieu. (1) 10.7 Subscription and Investment Representation Agreement between View Systems, Inc. and Rubin Investment Group, dated February 18, 2000. (2) 10.8 First Common Stock Purchase Warrant between View Systems, Inc. and Rubin Investment Group, dated February 18, 2000. (2) 10.9 Second Common Stock Purchase Warrant between View Systems, Inc. and Rubin Investment Group, dated February 18, 2000. (2) 10.10 Registration Rights Agreement between View Systems, Inc. and Rubin Investment Group, dated February 18, 2000. (2) 10.11 Non-qualified Stock Option Agreement with Richard W. Gray. (6) 10.12 Amendment to First Purchase Common Stock Warrant, Dated February 18,2000, Second Purchase Common Stock Warrant, Dated February 18, 2000, and Subscription and Investment Agreement, Dated February 18, 2000, Between View Systems and Rubin Investment Group. (7) 10.13 View Systems, Inc. 2000 Restricted Share Plan (8) 10.14 Second Amendment to First Purchase Common Stock Warrant, Dated February 18, 2000, Second Purchase Common Stock Warrant, Dated February 18, 2000, and Subscription and Investment Agreement, Dated February 18, 2000, Between View Systems and Rubin Investment Group. (9) 10.15 View Systems, Inc. Employment Agreement with Gunther Than. (1) 10.16 View Systems, Inc. Employment Agreement with Andrew L. Jiranek. (1) 10.17 View Systems, Inc. Engagement Agreement with Bruce Lesniak. (1) 10.18 View Systems, Inc. Employment Agreement with David Bruggeman. (1) 10.19 Eastern Tech Mfg. Corp. Employment Agreement with John Curran. (1) 10.20 Lease Agreement Between View Systems, Inc. and Lawrence Seiler. (1) 10.21 Stock Redemption Agreement, dated May 27, 1999, Between View Systems, Inc. and Gunther Than. (1) 10.22 Stock Redemption Agreement, dated September 30, 1999, Between View Systems, Inc. and Gunther Than. (1) 10.23 View Systems, Inc. 1999 Restricted Share Plan. (1) 10.24 Restricted Share Agreement with Bruce Lesniak (Lesniak & Associates). (1) 10.25 Restricted Share Agreement with John Curran. (1) 10.26 Restricted Share Agreement with David Bruggeman. (1) 10.27 Restricted Share Agreement with Gunther Than. (1) 10.28 Restricted Share Agreement with Andrew Jiranek. (1) 10.29 Restricted Share Agreement with Linda Than. (1) 10.30 View Systems, Inc. 1999 Employee Stock Option Plan. (1) 10.31 Non-qualified Stock Option Agreement with Gunther Than. (1) 10.32 Non-qualified Stock Option Agreement with Andrew Jiranek. (1) 10.33 Qualified Stock Option Agreement with Gunther Than. (1) 10.34 Qualified Stock Option Agreement with Andrew Jiranek. (1) 10.35 Promissory Notes from Xyros Systems, Inc. to Ken Weiss. (1) 10.36 Promissory Notes from Xyros Systems, Inc. to Hal Peterson. (1) 10.37 Loan Agreement Between Xyros Systems, Inc. and Columbia Bank. (1) 10.38 Letter From Columbia Bank Extending Term of Loan. (1) 10.39 License and Distribution Agreement with Visionics Corporation. (5) 10.40 License and Distribution Agreement with Lead Technologies, Inc. for Video OCR Software. (3) 10.41 License and Distribution Agreement with Anasoft Systems for Microsoft Operating System Software. (3) 10.42 License and Distribution Agreement with Aware, Inc. for Compression Software. (3) 10.43 Typical Non-Exclusive Reseller Agreement. (5) 10.44 Schedule of Contracted Resellers. (5) 10.45 Agreement between View Systems, Inc. and Magnum Financial Services, Inc., dated February 27, 2000. (5) 10.46 View Systems, Inc. Employment Agreement with Keith Company. (5) 16.1 Letter From Katz, Abosch, Windesheim, Gershman & Freedman, P.A. to View Systems, Inc., dated April 11, 2000. (4) 21.1 Subsidiaries of Registrant. (1) 23.1 Consent of Davis, Sita & Company.* 23.2 Consent of Stegman & Company.* 99.1 Consulting Agreement with Columbia Financial Group, LLC Granting Warrants and Stock and Granting Piggyback Registration Rights. (1) 99.2 Consulting Agreement with Tom Cloutier Granting Warrants and Registration Rights. (1) 99.3 Consulting Agreement with Guy Parr Granting Warrants and Registration Rights. (1) 99.4 Form of Stock Certificate. (1) 99.5 Consulting Agreement with Magnum Worldwide Investments, Ltd. (1) 99.6 Consulting Agreement with Mid-West First National, Inc. (10) 99.7 Consulting Agreement with Pacific First National, Corp. (10) 99.8 Consulting Agreement with Columbia Financial Group, LLC (10) 99.9 Consulting Agreement with John Clayton (10) 99.10 Consulting Agreement with Magnum Financial Group, LLC (10) 99.11 Letter to Rubin Investment Group dated March canceling its warrants (11) ------------------------------------------ (1) Incorporated By Reference from Registrant's Registration Statement on Form SB-2 Filed With the Commission On January 11, 2000 (2) Incorporated By Reference From Registrant's Report on Form 8K, dated February 19, 2000. (3) Incorporated By Reference From Registrant's Report on Form 10KSB, Dated March 30, 2000. (4) Incorporated By Reference From Registrant's Report on Form 8K, Dated April 13, 2000. (5) Incorporated By Reference From Registrant's Statement on Form SB-2/A, Dated April 27, 2000. (6) Incorporated By Reference From Registrant's Form 10 QSB, Dated May 15,2000. (7) Incorporated by Reference to Registrant's Registration Statement on Form SB-2/A, dated June 7, 2000. (8) Incorporated By Reference to Registrant's Definitive Proxy Statement On Schedule 14A, dated May 3, 2000. (9) Incorporated by reference to Registrant's Statement on Form SB 2/A, dated July 20, 2000. (10) Incorporated by reference to Registrant's Statement on Form SB 2, dated February 12, 2001. (11) Incorporated by reference to Registrant's Statement on Form SB 2/A, dated March 28, 2001. *attached hereto.