-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Scl0Y7q2+9C6YvTlMpSpZDc1sBbii82cywsofmVyFkmTzB2uBf4MJ32QEsj8EV91 Y2hKLHD6KMPujyC9ybAfRA== 0001023175-03-000195.txt : 20031114 0001023175-03-000195.hdr.sgml : 20031114 20031113194915 ACCESSION NUMBER: 0001023175-03-000195 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIEW SYSTEMS INC CENTRAL INDEX KEY: 0001075857 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS BUSINESS SERVICES [7380] IRS NUMBER: 592928366 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-30178 FILM NUMBER: 03999998 BUSINESS ADDRESS: STREET 1: 1100 WILSO DR STREET 2: 1100 WILSO DR CITY: BALTIMORE STATE: MD ZIP: 21223 BUSINESS PHONE: 4106463000 MAIL ADDRESS: STREET 1: 1100 WILSO DR STREET 2: 1100 WILSO DR CITY: BALTIMORE STATE: MD ZIP: 21233 10QSB 1 view10qsb.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 | | TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-30178 VIEW SYSTEMS, INC. (Exact name of small business issuer as specified in its charter) Nevada 59-2928366 (State of incorporation) (I.R.S. Employer Identification No.) 1100 Wilso Drive Baltimore, Maryland 21223 (Address of principal executive offices) (410) 646-3000 (Issuer's telephone number) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of November 11, 2003, View Systems Inc. had 62,330,619 shares of common stock outstanding. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] TABLE OF CONTENTS PART I: FINANCIAL INFORMATION Item 1: Financial Statements ..............................................2 Item 2: Management's Discussion and Analysis..............................12 Item 3: Controls and Procedures...........................................15 PART II: OTHER INFORMATION Item 1: Legal Proceedings.................................................15 Item 2: Changes in Securities and Use of Proceeds.........................15 Item 5: Other Information.................................................16 Item 6: Exhibits and Reports on Form 8-K .................................17 Signatures.................................................................18 PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The financial information set forth below with respect to our statements of operations for the three and nine month periods ended September 30, 2003 and 2002 is unaudited. This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the nine month period ended September 30, 2003, are not necessarily indicative of results to be expected for any subsequent period. These statements should be read in conjunction with our Form 10-KSB for the year ended December 31, 2002, which was filed with the Securities and Exchange Commission on March 31, 2003. 2 VIEW SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS ASSETS September 30, December 31, 2003 2002 ------------- ------------- (Unaudited) CURRENT ASSETS: Cash $ 73,810 $ 3,229 Accounts receivable (Net of allowance for uncollectible accounts of $10,000 at September 30, 2003 and December 31, 2002 respectively.) 228,042 62,711 Inventory - 171,326 ------------- ------------- Total current assets 301,852 237,266 ------------- ------------- PROPERTY AND EQUIPMENT: Equipment 348,385 348,385 Leasehold improvements 17,940 17,940 Software tools 34,571 34,571 Vehicles 46,832 46,832 ------------- ------------- 447,728 447,728 Less accumulated depreciation 251,407 204,247 ------------- ------------- Net value of property and equipment 196,321 243,481 ------------- ------------- OTHER ASSETS: Goodwill 781,248 781,248 Licenses and patents 1,494,960 1,626,855 Due from affiliated entities 118,827 123,327 Deposits 2,532 2,532 ------------- ------------- Total other assets 2,397,567 2,533,962 ------------- ------------- TOTAL ASSETS $ 2,895,740 $ 3,014,709 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 260,457 $ 445,623 Accrued interest 52,250 72,843 Notes payable 141,500 599,450 ------------- ------------- Total current liabilities 454,207 1,117,916 ------------- ------------- STOCKHOLDERS' EQUITY: Common stock-par value $0.001 100,000,000 shares authorized, 58,295,619 shares issued and outstanding 58,295 - 44,598,620 shares issued and outstanding - 44,598 Additional paid-in capital 15,326,844 13,810,878 Accumulated deficit (12,943,606) (11,958,683) ------------- ------------- Total stockholders' equity 2,441,533 1,896,793 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,895,740 $ 3,014,709 ============= ============= See Accompanying Notes 3
VIEW SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- September 30, September 30, September 30, September 30, 2003 2002 2003 2002 ------------- -------------- ------------- ------------- REVENUE: Sales of security systems $ 51,806 $ 175,061 $ 151,564 $ 306,657 Sales of weapons detection portals 187,928 92,480 300,345 92,480 ------------- -------------- ------------- ------------- Total sales 239,734 267,541 451,909 399,137 Cost of goods sold 132,770 149,747 227,760 221,861 ------------- -------------- ------------- ------------- GROSS PROFIT ON SALES 106,964 117,794 224,149 177,276 ------------- -------------- ------------- ------------- OPERATING EXPENSES: Advertising and promotion 5,652 22,915 17,524 32,025 Amortization 43,965 - 131,895 - Bad debts - 627,821 - 862,630 Business development 25,817 23,888 55,709 94,145 Depreciation 15,720 15,189 47,160 45,567 Dues and subscriptions - - 122 - Insurance 8,704 8,768 15,792 25,263 Interest 2,940 4,192 8,906 15,846 Investor relations 4,281 4,035 20,400 55,864 Miscellaneous expense 3,085 973 7,976 10,908 Office expense 19,854 27,266 50,295 122,806 Professional fees 27,622 571,517 68,091 892,708 Rent 13,920 11,566 51,700 37,834 Repairs and maintenance - 3,369 - 7,433 Research and development 13,745 26,843 25,177 101,729 Salaries and benefits 423,532 471,445 666,598 766,471 Taxes-other (230) - 2,060 2,150 Travel 11,659 3,037 26,408 33,816 Utilities 2,076 4,596 13,259 13,241 ------------- -------------- ------------- ------------- Total operating expenses 622,342 1,827,420 1,209,072 3,120,436 ------------- -------------- ------------- ------------- NET LOSS $ (515,378) $ (1,709,626) $ (984,923) $ (2,943,160) ============= ============== ============= ============= NET LOSS PER SHARE: Basic $ (0.01) $ (0.05) $ (0.02) $ (0.09) ============= ============== ============= ============= Diluted $ (0.01) $ (0.05) $ (0.02) $ (0.09) ============= ============== ============= ============= WEIGHTED AVERAGE SHARES OUTSTANDING 46,132,270 34,439,000 45,828,321 31,370,334 ============= ============== ============= ============= See Accompanying Notes 4
VIEW SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED September 30, September 30, 2003 2003 -------------- -------------- (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (984,923) $ (2,943,160) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 179,055 45,567 Bad debt expense - 862,630 Stock-based compensation 261,500 1,068,259 Changes in operating assets and liabilities: Accounts receivable (165,331) (155,419) Inventory 171,326 (28,609) Deposits and other assets - (570) Accounts payable (185,166) 17,710 Accrued interest 8,250 8,250 -------------- -------------- Net cash used in operating activities (715,289) (1,125,342) -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment - (27,854) Funds advanced (to) from affiliated entities 4,500 (15,594) Cash element in Milestone acquisition - 58,849 -------------- -------------- Net cash provided by investing activities 4,500 15,401 -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Funds advanced (to) from shareholders 472,820 (4,834) Repayment of note payable-bank - (6,052) Net proceeds from sales of stock 308,550 1,038,700 -------------- -------------- Net cash provided by financing activities 781,370 1,027,814 -------------- -------------- NET INCREASE (DECREASE) IN CASH 70,581 (82,127) CASH AT BEGINNING OF PERIOD 3,229 73,344 -------------- -------------- CASH AT END OF PERIOD $ 73,810 $ (8,783) ============== ============== SIGNIFICANT NON-CASH INVESTING ACTIVITIES: Common stock issued in exchange for net assets of Milestone Technology, Inc. as follows: Accounts receivable - 28,132 Inventory - 359,647 Fixed assets - 188 Patents - 1,317,467 Accounts payable - (6,470) Notes payable - (703,449) Accrued interest - (28,843) SIGNIFICANT NON-CASH FINANCING ACTIVITIES: Common stock issued in payment of notes payable 959,613 194,000 Reduction in notes payable due to renegotiations 164,450 - See Accompanying Notes 5
VIEW SYSTEMS, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 Additional Total Common Paid-In Accumulated Stockholders' Stock Capital Deficit Equity -------------- ------------- ------------- ------------- Balances at December 31, 2001 $ 20,193 $ 10,119,024 $ (8,035,214) $ 2,104,003 Sales of common stock 6,075 1,032,625 - 1,038,700 Issuance of common stock in exchange for interest in Milestone Technology, Inc. 3,300 1,019,700 - 1,023,000 Issuance of common stock (employee and other compensation) 10,682 1,057,577 - 1,068,259 Issuance of common stock in payment of a note payable 735 193,265 - 194,000 Net loss for the nine months ended September 30, 2002 - - (2,943,160) (2,943,160) -------------- ------------- ------------- ------------- Balances at September 30, 2002 (Unaudited) 40,985 13,422,191 (10,978,374) 2,484,802 Sales of common stock 2,475 251,025 - 253,500 Issuance of common stock (employee and other compensation) 1,138 137,662 - 138,800 Net loss for the three months ended December 31, 2002 - - (980,309) (980,309) -------------- ------------- ------------- ------------- Balances at December 31, 2002 44,598 13,810,878 (11,958,683) 1,896,793 Sales of common stock 2,897 305,653 - 308,550 Issuance of common stock (employee and other compensation) - 261,500 - 261,500 Issuance of common stock in payment of note payables 10,800 948,813 - 959,613 Net loss for the nine months ended September 30, 2003 - - (984,923) (984,923) -------------- ------------- ------------- ------------- Balances at September 30, 2003 (Unaudited) $ 58,295 $ 15,326,844 $(12,943,606) $ 2,441,533 ============== ============= ============= ============= See Accompanying Notes 6
VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 1. 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. In March 2002, the Company acquired Milestone Technology, Inc. which has developed a concealed weapons detection portal. Basis of Presentation --------------------- The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position and results of operations. It is management's opinion, however, that all adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. Basis of Consolidation ---------------------- The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Milestone Technology, Inc. ("Milestone"). 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. Revenue Recognition ------------------- The Company and its subsidiaries recognize revenue and the related cost of goods sold upon shipment of the product, the price of the product is fixed or determinable and collectibility is reasonably assured. 7 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 Inventories ----------- Inventories are stated at the lower of cost or market. Cost is determined by the last-in-first-out method (LIFO). The inventory at December 31, 2002 consists entirely of weapons detection portals. 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 Leasehold improvements Life of lease Repairs and maintenance charges, which do not increase the useful lives of assets, are charged to operations as incurred. Depreciation expense for the nine months ended September 30, 2003 and 2002 amounted to $47,160 and $45,567, respectively. 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. 8 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 Advertising ----------- Advertising costs are charged to operations as incurred. Advertising costs for the nine months ended September 30, 2003 and 2002 were $17,524, and $32,025, 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. 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. Goodwill -------- Goodwill represents the excess of the cost of assets acquired in business combinations accounted for under the purchase method of accounting over the fair value of the net assets acquired at the dates of acquisition. Effective January 1, 2002 goodwill will no longer be amortized but rather tested for impairment on an annual basis. Licenses and Patents -------------------- The Company has assigned a value to licenses and patents acquired in its acquisition of Milestone which are being amortized on a straight-line basis over a ten-year period. 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 three and nine month periods ended September 30, 2003 does not include potential shares of common stock equivalents, as their impact would be antidilutive. 9 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 Segment Reporting ----------------- The company has determined that it does not have any separately reportable operating segments as of September 30, 2003. 2. FINANCIAL CONDITION Since its inception, the Company has incurred significant losses and as of September 30, 2003 had an accumulated deficit of $12.9 million. The Company believes that it will incur operating losses for the foreseeable future. There can be no assurance that the Company will be able to generate sufficient revenues to achieve or sustain profitability in the future. 3. GOODWILL AND OTHER INTANGIBLE ASSETS Intangible assets consist of the following:
September 30, 2003 December 31, 2002 ------------------------------------ ----------------------- Average Gross Gross Life Carrying Accumulated Carrying Accumulated (Years) Amount Amortization Amount Amortization -------- -------------- ------------ ------------- ------------- Amortized intangible assets - Licenses and patents 10.0 $ 1,758,594 $ 263,634 $ 1,758,594 $ 131,739 ============== ============ ============= ============= Intangible assets not subject to amortization - Goodwill $ 1,346,972 $ 565,724 $ 1,346,972 $ 565,724 ============== ============ ============= =============
Amortization expense for the three and nine months ended September 30, 2003 was $43,965 and $131,895, respectively. Estimated amortization expense for each of the following years ending on December 31, is as follows: 2003 $175,860 2004 175,860 2005 175,860 2006 175,860 2007 175,860 10 VIEW SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2003 4. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation 46 Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 (FIN 46). FIN 46 provides a new framework for identifying variable interest entities (VIEs) and determining when a company should include the assets, liabilities, noncontrolling interests and results of activities of a VIE in its consolidated financial statements. FIN 46 is effective immediately for VIEs created after January 31, 2003 and is effective beginning in the third quarter of 2003 for VIEs created prior to the issuance of the interpretation. The adoption of this standard will not have a material impact on the Company's financial statements. Statement of Financial Accounting Standards (SFAS) No. 148 Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123 (SFAS 123) provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure requirements of SFAS 123 Accounting for Stock-Based Compensation to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The adoption of this standard will not have a material impact on the Company's financial statements. On May 15, 2003, the FASB issued SFAS 150 Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity and is effective May 31, 2003 for all new and modified financial instruments and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. SFAS 150 changes the accounting for certain financial instruments that, under previous guidance issuers could account for as equity. SFAS 150 requires that those instruments be classified as liabilities (or assets in some circumstances). The adoption of this standard did not have a material impact on the Company's financial statements. 11 In this report references to "View Systems," "we," "us," and "our" refer to View Systems, Inc. FORWARD LOOKING STATEMENTS This quarterly report contains certain forward looking statements that involve risks and uncertainties, such as statements of View System's plans and expectations. Any statements contained in this report that are not statements of historical fact may be deemed to be forward looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within View Systems's control. These factors include, but are not limited to, economic conditions generally and in the industry which View Systems participates; competition within View Systems's chosen market and failure by View Systems to successfully develop business relationships. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS View Systems designs and develops computer software and hardware used in conjunction with surveillance capabilities. We have incurred losses for the past two fiscal years and have an accumulated deficit of $12,488,813 at September 30, 2003. Management believes we will incur operating losses for the foreseeable future. However, management expects projected sales revenues and anticipated equity infusions and advances from management to be sufficient to provide funding to sustain operations through September 30, 2004. Since start-up of operations in September 1998, we have devoted most of our resources to the development of digital video surveillance products. However, in March 2002 we shifted the focus of our operations to the introduction of our SecureScan Concealed Weapons Detection System. We have worked diligently to make engineering design changes to the Concealed Weapons Detection product to accommodate the price points required by competitive pressures. The engineering design changes required locating new sources for components and limited field testing. In addition, demonstration of the product involves the shipping of a large bulky archway and a highly trained technical staff; consequently, sales cycle times are lengthy. Acquisition Treatment In December of 2001 we entered into a joint venture agreement with Milestone Technology, Inc., an Idaho corporation, to develop its Concealed Weapons Detection portal. As part of the agreement we issued 500,000 shares of View Systems common stock for a 6% interest in Milestone Technology and the rights to the Concealed Weapons Detection technology. Then on March 25, 2002, View Systems acquired the remaining 94% interest of Milestone Technology in exchange for 3,300,000 common shares. This acquisition was valued at approximately $1,298,000 and was accounted for under the purchase method of accounting. Accordingly, Milestone Technology's results of operation have been included with View Systems from the closing date in March 2002 and its consolidated assets and liabilities have been recorded at their fair values on the same date. In May 2003 a controversy arose regarding the ownership of Milestone Technology, Inc. and the Concealed Weapons Detection technology. In October 2003 the controversy was settled and the acquisition of Milestone Technology was finalized and the license rights to the Concealed Weapons Detection technology were re-assigned to View Systems. Results Of Operations The following discussion and analysis should be read in conjunction with our unaudited financial statements and the accompanying notes for the three and nine month periods ended September 30, 2003 and 2002, which are included in this report. Revenue - For the nine months ended September 30, 2003, revenue from sales of our products increased $52,772, or 13%, to $451,909 from $399,137 in the same period last year. For the three months ended September 30, 2003, revenues from sales of our products decreased $27,807 or 10%, to $239,734 from $267,541 in the same 12 period last year. In comparing the 2002 and 2003 nine month periods, we have shifted the source for the majority of our revenues from predominately security systems to SecureScan Concealed Weapons Detection portals. The sales cycles in the concealed weapons detection market are long and require the approval of highly bureaucratic decision makers. However, in contrast to digital video storage, the Concealed Weapons Detection product price points and profit margins are larger. Costs Of Goods Sold - Cost of products and services sold consist principally of the costs of hardware components and supplies. We generally operate through resellers who install and service the units. We do not determine our inventory on a quarterly basis, instead we do it on an annual basis. Therefore, our cost of goods sold calculations are based on estimates of inventory used in products sold. However, as of September 30, 2003, we had no weapons detection system portals in inventory. Assembly of the new portals commenced in October 2003. The cost of products and services sold was $227,760 for the nine months ended September 30, 2003, and represented 50% of revenue for the period, compared to $221,861 for the nine months ended September 30, 2002, which represents 56% of revenues for that period. The cost of products and services sold was $132,770 for the three months ended September 30, 2003, and represented 55% of revenue for the period, compared to $149,747 for the three months ended September 30, 2002, which represented 56% of revenues for that period. Because of our low sales volume during this period, we do not consider the costs of goods sold to be a good measure of our true costs of goods sold. As our product sales increase and account for a larger percentage of our overall sales, we expect that our costs of goods and services sold will decline and stabilize as a percentage of total revenue. We are continually working on engineering changes in our security products that we expect will lower component costs for these products. Gross Profit - Gross profit on sales for the nine months ended September 30, 2003, increased $46,873, or 26%, to $224,149 compared with $177,276 in the same period last year. Gross profit margin for the nine months ended September 30, 2003, was 50% compared with 44% in the same period last year. Gross profit on sales for the three months ended September 30, 2003, decreased $10,830, or 9%, to $106,964 compared with $117,794 for the same period last year. Gross profit margin for the three months ended September 30, 2003, was 45% compared to 44% for the same period last year. Because of low net sales we achieved in the period ended September 30, 2003, we do not believe gross profit margin comparisons are meaningful at this state of our operations. Total Operating Expense - Operating expenses for the nine months ended September 30, 2003, decreased to $1,209,072, compared with $3,120,436 for the comparable period in 2002. The decrease is principally due to unusually large bad debts in the prior year of $862,630 compared to none in the current period, and decreased expenditures in professional fees. Amortization expense associated with the value of licenses and patents amounted to $131,895 for the nine months ended September 30, 2003, compared with no amortization expense in the same period last year. Operating expenses for the three months ended September 30, 2003, decreased to $622,342, compared with $1,827,420 for the comparable period in 2002. The decrease is principally due to unusually large bad debts in the prior period of $627,821 and significant decreases in professional fees. Research and Development Expense - We spent $25,177 on research and development for the nine months ended September 30, 2003, as compared with $101,729 in the same period last year. We spent $13,745 on research and development for the three months ended September 30, 2003, as compared with $26,843 in the same period last year. We are working on changing our production facilities to manufacture the Concealed Weapons Detection portal in our facility. Management believes this change will allow our profit margins to increase due to a reduction in costs of production. Salaries and Benefits - We spent $666,598 on salaries and benefits for the nine months ended September 30, 2003, as compared with $766,471 in the same period last year. We spent $423,532 on salaries and benefits for the three months ended September 30, 2003, as compared with $471,445 in the same period last year. 13 Net Loss - As a result of the foregoing, we recorded a net loss from operations of $984,923 for the nine months ended September 30, 2003, compared to a net loss of $2,943,160 for the nine months ended September 30, 2002. The net loss from operations was $515,378 for the three months ended September 30, 2003, compared to a net loss of $1,709,626 for the three months ended September 30, 2002. As a result, we recorded a net less per diluted share of $0.02 for the nine month period ended September 30, 2003, compared to a net loss per diluted share of $0.09 for the comparable 2002 period. Liquidity and Capital Resources Historically, we have funded our cash requirements primarily through equity transactions. We are not currently generating sufficient cash from our operations to finance our business and will continue to need to raise capital from other sources. We used the proceeds from these sales of equity to fund operating activities, including, product development, sales and marketing, and to invest in the acquisition of technology, assets and business. We also have relied on our management for cash infusions to sustain operations. These cash infusions are in the form of advances without repayment terms and we anticipate that we will require additional advances in the future; however, there can be no assurance that these funds will be available in the future Starting on August 6, 2003, we conducted a Regulation D Rule 505 offering for an aggregate offering amount of $1,500,000. As of September 25, 2003, we had sold 14,320,000 common shares at $0.10 per share for an aggregate amount of $1,432,000. We realized proceeds of $1,417,608 which we intend to use for manufacturing capital and working capital. As of September 30, 2003, we had total assets of $2,895,740, a decrease of $118,969 from $3,014,709 at December 31, 2002. Total liabilities were $454,207, at September 30, 2003, resulting in stockholders' equity of $2,441,533, an increase of $544,740 from the December 31, 2002, balance of $1,896,793. As a result of the foregoing, at September 30, 2003, we had negative working capital of $152,355, including $228,042 in net trade accounts receivable and $0 in inventory. During the nine months ended September 30, 2003, our cash increased from $3,229 at December 31, 2002, to $73,810 at September 30, 2003. Net cash used in operating activities was $715,289 for the nine months ended September 30, 2003, compared to net cash used by operating activities of $1,125,342 for the comparable 2002 period. This decrease primarily is a result of increases in accounts receivable of $165,331, decreases in inventory of $171,326, and decreases in accounts payable of $185,166. Net cash provided by investing activities was $4,500 for the nine month period ended September 30, 2003, and was related to advances from affiliated entities. Net cash provided by investing activities was $15,401 for the 2002 comparable period and was primarily the result of the acquisition of cash in the Milestone Technology acquisition Net cash generated from financing activities during the nine months ended September 30, 2003, was $781,370; consisting of proceeds received from sales of stock of $308,550 and loans from shareholders of $472,820. Net cash provided for the 2002 comparable period was $1,027,814; primarily from proceeds from sales of common stock. Commitments and Contingent Liabilities Our commitments include operating leases and current liabilities. At December 31, 2002, future minimum payments for operating leases related to properties in Colorado, Maryland and Idaho were $183,069 through 2006. Other commitments include accounts payable of $260,457 and notes payable of $141,500. Financing We operate in a very competitive industry that requires continued large amounts of capital to develop and 14 promote our products. We currently estimate we will need between $1 million and $2 million to fully develop our products and further expand our business operations. We believe that it will be essential to continue to raise additional capital, both internally and externally, to compete in this industry. We cannot assure that we will be able to obtain financing on favorable terms and we may be required to further reduce expenses and scale back our operations. In addition to accessing the public and private equity markets, we will pursue bank credit lines and equipment leases for certain capital expenditures, if necessary. ITEM 3: CONTROLS AND PROCEDURES Our CEO and principal financial officer, has reevaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and determined that there continued to be no significant deficiencies in these procedures. Also, there were no changes made or corrective actions to be taken related to our internal control over financial reporting. PART II. OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS On May 8, 2003, View Systems, Inc. filed a complaint against Messrs. Steve Williams and Paul Reep, former officers and shareholders of Milestone Technology, Inc. The complaint was filed in the United States District Court for the District of Maryland Division and the controversy is related to the ownership of Milestone Technology, Inc. and the Concealed Weapons Detection System. View Systems claims ownership of Milestone Technology, Inc. and the exclusive licensing rights to the Concealed Weapons Detection System. Management and counsel negotiated a settlement with Mr. Williams and Milestone Technology, Inc. in July 2003; but we continue to pursue Mr. Reep. In October 2003 we moved to amend the complaint to add additional claims against Mr. Reep for intentional interference with contractual relations, tortious interference with economic relations and conversion. The court stayed consideration of our motion pending the appearance by new counsel for Mr. Reep. ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS Articles of Incorporation and Bylaws On July 25, 2003, View Systems incorporated View Systems, Inc. as a wholly-owned Nevada corporation for the sole purpose of changing the domicile of the company from Florida to Nevada. On July 31, 2003, articles of merger were filed with the state of Nevada to complete the domicile merger. As a result of the domicile merger the articles of incorporation and bylaws of View Systems are those of the Nevada corporation. The Florida and Nevada articles of incorporation and bylaws are similar to each other in most material respects. The Nevada articles of incorporation increase the authorized common stock to 100,000,000 shares, par value $0.001, and authorize a preferred class of 10,000,000 shares, par value $0.01. Also, the number of shareholders required to establish a quorum at a shareholders' meeting is increased from one-third of the voting stock to a majority of the voting stock. Pursuant to Nevada Revised Statutes Section 78.7502 and 78.751, our articles of incorporation and bylaws provide for the indemnification of present and former directors and officers and each person who serves at our request as our officer or director. Indemnification for a director is mandatory and indemnification for an officer, agent or employee is permissive. We will indemnify such individuals against all costs, expenses and liabilities incurred in a threatened, pending or completed action, suit or proceeding brought because such individual is our director or officer. Such individual must have conducted himself in good faith and reasonably believed that his conduct was in, or not opposed to, our best interest. In a criminal action the individual must not have had a reasonable cause to believe his conduct was unlawful. This right of indemnification is limited to our financial ability to pay such expenses, but shall not be exclusive of other rights the individual is entitled to as a matter of law or otherwise. Our bylaws provide that individuals may receive advances for expenses if the individual provides a written affirmation of his good faith 15 belief that he has met the appropriate standards of conduct and he will repay the advance if he is judged not to have met the standard of conduct. We will not indemnify an individual adjudged liable due to his negligence or wilful misconduct toward us, or if he improperly received personal benefit. Indemnification in a derivative action is limited to reasonable expenses incurred in connection with the proceeding. Also, we are authorized to purchase insurance on behalf of an individual for liabilities incurred whether or not we would have the power or obligation to indemnify him pursuant to our bylaws. Recent Sales of Unregistered Securities On October 14, 2003, we issued an aggregate of 190,000 common shares in consideration for services. We issued 100,000 shares to Ruediger Klose and 90,000 shares to Charlotte DeLoof for services rendered under their employment agreements. We relied on an exemption from the registration requirements of the Securities Act for a private transaction not involving a public distribution provided by Section 4(2) under the Securities Act. On September 10, 2003, our board of directors authorized the issuance of an aggregate of 950,000 common shares valued at $114,000 for services rendered to View Systems. We issued 500,000 shares to Daniel W. Jackson for legal services valued at $60,000. We issued 200,000 shares to William D. Smith for services rendered to the company valued at $24,000. We issued 250,000 shares to Barry Feldman for services rendered to the company valued at $30,000. We relied on an exemption from the registration requirements of the Securities Act for a private transaction not involving a public distribution provided by Section 4(2) under the Securities Act. On September 2, 2003, our board of directors authorized the issuance of 1,150,000 common shares to Gunther Than in consideration for services rendered to the company valued at $138,000. We relied on an exemption from the registration requirements of the Securities Act for a private transaction not involving a public distribution provided by Section 4(2) under the Securities Act. Starting on August 6, 2003 we conducted a Regulation D Rule 505 offering for an aggregate offering amount of $1,500,000. As of September 25, 2003, we had sold 14,320,000 common shares at $0.10 per share to accredited investors and two purchasers for an aggregate amount of $1,432,000. We relied on an exemption from the registration requirements of the Securities Act of 1933 for a limited offering provided by Section 3(b) and Regulation D. We believe each purchaser in the above transactions: . was aware that the securities had not been registered under federal securities laws; . acquired the securities for his/her/its own account for investment purposes under the federal securities laws; . understood that the securities would need to be held indefinitely unless registered or an exemption from registration applied to a proposed disposition; and, . was aware that the certificate representing the securities would bear a legend restricting its transfer. ITEM 5: OTHER INFORMATION Technology License - As a result of the settlement of our lawsuit with the former management of Milestone Technology in early October 2003, we were able to resolve the ownership issues surrounding the Concealed Weapons Detection technology. On November 11, 2003, the Idaho National Energy and Environmental Laboratories re-assigned the exclusive license to commercialize, manufacture and market the Concealed Weapons Detection technology to View Systems. Product Development - In early October 2003 we announced an alliance with School Technology 16 Management to integrate and market its products with ours. School Technology Management has developed the Comprehensive Attendance Administration and Security System which is designed to use a magnetic card swipe system to monitor identification of students entering a school and to verify each student's attendance. Our intent is to combine School Technology Management's card swipe system with our SecureScan portal. With the combined technology a student will enter the portal and be scanned for any threat objects and his or her identity will be concurrently confirmed to school security officers. We anticipate that the National Institute of Justice will study a prototype of the combined portal during the next calendar year. Production of Portals - In early October 2003, we began production of twenty SecureScan Portals. The SecureScan portal consists of two components; the work station contains the software and display imagery, and the archway holds the sensors which detect threat objects. The control unit of the portal continues to be manufactured internally at our facilities in Baltimore, Maryland. The archway and sensor are being manufactured and assembled through Quantum Magnetics, a United States Laboratory supplier. Once complete, the portal is sent to our Baltimore facility to be tested and shipped to its final destination. Of the twenty units, we anticipate four will be installed at federal and state court facilities in the United States. Thirteen will be designated for international delivery, training and demonstration. On October 10, 2003, we announced delivery and installation of the first international SecureScan portal at the Federation Building, Parliament Hill, Ottawa, Ontario. This sale was completed through Levitt-Safety Ltd., a Canadian reseller. ITEM 6. EXHIBITS AND REPORT ON FORM 8-K Part II Exhibits 3.1 Articles of Incorporation of View Systems, as amended 3.2 By-Laws of View Systems 10.1 View Systems, Inc. Employment Agreement with Gunther Than. (Incorporated by reference to registration statement on Form SB-2, filed January 11, 2000) 21.1 Subsidiaries (Incorporated by reference to Form 10-KSB, filed March 31, 2003) 31.1 Chief Executive Officer Certification 31.2 Principal Financial Officer Certification 32.1 Section 1350 Certification Reports on Form 8-K None. 17 SIGNATURES In accordance with the requirements of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VIEW SYSTEMS, INC. /s/ Gunther Than Date: November 13, 2003 By:__________________________________________ Gunther Than CEO, Principal Financial Officer, Treasurer and Director /s/ Barry Feldman Date: November 13, 2003 By:___________________________________________ Barry S. Feldman President and Director 18 EX-3.1 3 viewex31.txt ARTICLES OF INCORPORATION, AS AMENDED Exhibit 3.1 ARTICLES OF INCORPORATION OF VIEW SYSTEMS, INC. AS AMENDED The undersigned, natural person of eighteen years or more of age, acting as incorporator of a Corporation (the "Corporation") under the Nevada Revised Statutes, adopts the following Articles of Incorporation for the Corporation: ARTICLE I: NAME OF CORPORATION The name of the Corporation is View Systems, Inc. ARTICLE II: SHARES The amount of the total authorized capital stock of the Corporation is 100,000,000 shares of common stock, par value $0.001 per share and 10,000,000 shares of preferred stock, par value $0.01. Each share of common stock shall have one (1) vote. Such stock may be issued from time to time without any action by the stockholders for such consideration as may be fixed from time to time by the Board of Directors, and shares so issued, the full consideration for which has been paid or delivered, shall be deemed the full paid up stock, and the holder of such shares shall not be liable for any further payment thereof. Said stock shall not be subject to assessment to pay the debts of the Corporation, and no paid-up stock and no stock issued as fully paid, shall ever be assessed or assessable by the Corporation. The Corporation is authorized to issue 100,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. ARTICLE III: REGISTERED OFFICE AND AGENT The address of the initial registered office of the Corporation is and the name of its initial registered agent at such address is 777 E. William Street, Suite 202, Carson City, Nevada 89701, Budget Corp. ARTICLE IV: INCORPORATOR The name and address of the incorporator is: View Systems, Inc., a Florida Corporation 1100 Wilso Drive Baltimore, Maryland 21223 ARTICLE V: DIRECTORS The members of the governing board of the Corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the bylaws of the Corporation, provided that the number of directors shall not be reduced to less than one (1). NAME AND ADDRESS Gunther Than 9693 Gerwig Lane, Suite O Columbia, MD 21046 Michael Bagnoli 9693 Gerwig Lane, Suite O Columbia, MD 21046 Martin Massen 9693 Gerwig Lane, Suite O Columbia, MD 21046 ARTICLE VI: GENERAL 1. The board of directors shall have the power and authority to make and alter, or amend, the bylaws, to fix the amount in cash or otherwise, to be reserved as working capital, and to authorize and cause to be executed the mortgages and liens upon the property and franchises of the Corporation. 2. The board of directors shall, from time to time, determine whether, and to what extent, and at which times and places, and under what conditions and regulations, the accounts and books of this Corporation, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have the right to inspect any account, book or document of this Corporation except as conferred by the Statutes of Nevada, or authorized by the directors or any resolution of the stockholders. 3. The stockholders and directors shall have the power to hold their meetings, and keep the books, documents and papers of the Corporation outside of the State of Nevada, and at such place as may from time to time be designated by the bylaws or by resolution of the board of directors or stockholders, except as otherwise required by the laws of the State of Nevada. 4. The Corporation shall indemnify each present and future officer and director of the Corporation and each person who serves at the request of the Corporation as an officer or director of the Corporation, whether or not such person is also an officer or director of the Corporation, against all costs, expenses and liabilities, including the amounts of judgments, amounts paid in compromise settlements and amounts paid for services of counsel and other related expenses, which may be incurred by or imposed on him in connection with any claim, action, suit, proceeding, investigation or inquiry hereafter made, instituted or threatened in which he may be involved as a party or otherwise by reason of any past or future action taken or authorized and approved by him or any omission to act as such officer or director, at the time of the incurring or imposition of such costs, expenses, or liabilities, except such costs, expenses or liabilities as shall relate to matters as to which he shall in such action, suit or proceeding, be finally adjudged to be liable by reason of his negligence or willful misconduct toward the Corporation or such other Corporation in the performance of his duties as such officer or director, as to whether or not a director or officer was liable by reason of his negligence or willful misconduct toward the Corporation or such other Corporation in the performance of his duties as such officer or director, in the absence of such final adjudication of the existence of such liability, the board of directors and each officer and director may conclusively rely upon an opinion of legal counsel selected by or in the manner designed by the board of directors. The foregoing right of indemnification shall not be exclusive of other rights to which any such officer or director may be entitled as a matter of law or otherwise, and shall inure to the benefit of the heirs, executors, administrators and assigns of each officer or director. These Articles of Amendment to the Articles of Incorporation of View Systems, Inc., a Nevada Corporation were executed this 25th day of July, 2003. /s/ Gunter Than __________________________________ Gunther Than /s/ Martin Massen ___________________________________ Martin Massen /s/ Michael Bagnoli ___________________________________ Michael Bagnoli /s/ William Smith ___________________________________ William Smith /s/ Barry Feldman ___________________________________ Barry Feldman EX-3.2 4 viewex32.txt BYLAWS Exhibit 3.2 BYLAWS OF VIEW SYSTEMS, INC. ARTICLE 1. OFFICES 1.1 Business Office. The principal office of the corporation shall be located at any place either within or outside the State of Nevada as designated in the corporation's most recent document on file with the Nevada Secretary of State, Division of Corporations. The corporation may have such other offices, either within or without the State of Nevada as the board of directors may designate or as the business of the corporation may require from time to time. 1.2 Registered Office. The registered office of the corporation shall be located within the State of Nevada and may be, but need not be, identical with the principal office. The address of the registered office may be changed from time to time. ARTICLE 2. SHAREHOLDERS 2.1 Annual Shareholder Meeting. The annual meeting of the shareholders shall be held on the 15th day of June in each year, beginning with the year 2004 at the hour of 2:00 p.m., or at such other time on such other day within such month as shall be fixed by the board of directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Nevada, such meeting shall be held on the next succeeding business day. 2.2 Special Shareholder Meeting. Special meetings of the shareholders, for any purpose or purposes described in the meeting notice, may be called by the chairman, secretary, or by the board of directors, and shall be called by the chairman and/or secretary at the request of the holders of not less than one-fourth of all outstanding votes of the corporation entitled to be cast on any issue at the meeting. 2.3 Place of Shareholder Meeting. The board of directors may designate any place, either within or without the State of Nevada, as the place of meeting for any annual or any special meeting of the shareholders, unless by written consent, which may be in the form of waivers of notice or otherwise, all shareholders entitled to vote at the meeting designate a different place, either within or without the State of Nevada, as the place for the holding of such meeting. If no designation is made by either the directors or unanimous action of the voting shareholders, the place of meeting shall be at the Corporation's place of business. 2.4 Notice of Shareholder Meeting. Written notice stating the date, time, and place of any annual or special shareholder meeting shall be delivered not less than 3 nor more than 60 days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman, the board of directors, or other persons calling the meeting, to each shareholder of record entitled to vote at such meeting and to any other shareholder entitled by the Nevada Revised Statutes (the "Statutes") or the articles of incorporation to receive notice of the meeting. Notice shall be deemed to be effective at the earlier of: (1) when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid; (2) on the date shown on the return receipt if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee; (3) when received; or (4) 3 days after deposit in the United States mail, if mailed postpaid and correctly addressed to an address other than that shown in the corporation's current record of shareholders. If any shareholder meeting is adjourned to a different date, time or place, notice need not be given of the new date, time and place, if the new date, time and place is announced at the meeting before adjournment. But if the adjournment is for more than 90 days or if a new record date for the adjourned meeting is or must be fixed, then notice must be given pursuant to the requirements of the previous paragraph, to those persons who are shareholders as of the new record date. 2.5 Waiver of Notice. A shareholder may waive any notice required by the Statutes, the articles of incorporation, or these bylaws, by a writing signed by the shareholder entitled to the notice, which is delivered to the corporation (either before or after the date and time stated in the notice) for inclusion in the minutes or filing with the corporate records. A shareholder's attendance at a meeting: (a) waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting because of lack of notice or effective notice; and (b) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. 2.6 Fixing of Record Date. For the purpose of determining shareholders of any voting group entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive payment of any distribution, or in order to make a determination of shareholders for any other proper purpose, the board of directors may fix in advance a date as the record date. Such record date shall not be more than 90 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If no record date is so fixed by the board for the determination of shareholders entitled to notice of, or to vote at a meeting of shareholders, the record date for determination of such shareholders shall be at the close of business on the day the first notice is delivered to shareholders. If no record date is fixed by the board for the determination of shareholders entitled to receive a distribution, the record date shall be the date the board authorizes the distribution. With respect to actions taken in writing without a meeting, the record date shall be the date the first shareholder signs the consent. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof unless the board of directors fixes a new record date which it must do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. 2.7 Shareholder List. After fixing a record date for a shareholder meeting, the corporation shall prepare a list of the names of its shareholders entitled to be given notice of the meeting. The shareholder list must be available for inspection by any shareholder, beginning on the earlier of 10 days before the meeting for which the list was prepared or 3 business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, and any adjournment thereof. The list shall be available at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting is to be held. If a quorum has not been reached, after notification, then action of a matter shall be determined by a simple majority of received, certified votes as though a quorum exists. 2.8 Shareholder Quorum and Voting Requirements. 2.8.1 Quorum. Except as otherwise required by the Statutes or the articles of incorporation, a majority of the outstanding shares of the corporation, represented by person or by proxy, shall constitute a quorum at each meeting of the shareholders. If a quorum exists, action on a matter, other than the election of directors, is approved if the votes cast favoring the action exceed the votes cast opposing the action, unless the articles of incorporation or the Statutes require a greater number of affirmative votes. 2.8.2 Voting of Common Shares. Unless otherwise provided in the articles of incorporation or these bylaws, each outstanding share, regardless of class, is entitled to one vote upon each matter submitted to a vote at a meeting of shareholders. 2.9 Quorum and Voting requirements of Voting Groups. If the articles of incorporation or the Statutes provide for voting by a single voting group on a matter, action on that matter is taken when voted upon by that voting group. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the articles of incorporation or the Statutes provide otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. If the articles of incorporation or the Statutes provide for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately. Action may be taken by one voting group on a matter even though no action is taken by another voting group entitled to vote on the matter. If a quorum exists, action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation or the Statutes require a greater number of affirmative votes. 2.10 Greater Quorum or Voting Requirements. The articles of incorporation may provide for a greater quorum or voting requirement for shareholders, or voting groups of shareholders, than is provided for by these bylaws. An amendment to the articles of incorporation that adds, changes, or deletes a greater quorum or voting requirement for shareholders must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater. 2.11 Proxies. At all meetings of shareholders, a shareholder may vote in person or by proxy which is executed in writing by the shareholder or which is executed by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the corporation or other person authorized to tabulate votes before or at the time of the meeting. No proxy shall be valid after 11 months from the date of its execution unless otherwise provided in the proxy. All proxies are revocable unless they meet specific requirements of irrevocability set forth in the Statutes. The death or incapacity of a voter does not invalidate a proxy unless the corporation is put on notice. A transferee for value who receives shares subject to an irrevocable proxy, can revoke the proxy if he had no notice of the proxy. 2.12 Corporation's Acceptance of Votes. 2.12.1 If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a shareholder, the corporation, if acting in good faith, is entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and give it effect as the act of the shareholder. 2.12.2 If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation does not correspond to the name of a shareholder, the corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and give it effect as the act of the shareholder if: (a) the shareholder is an entity as defined in the Statutes and the name signed purports to be that of an officer or agent of the entity; (b) the name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (c) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; or (d) the name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; or (e) two or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-tenants or fiduciaries. 2.12.3 If shares are registered in the names of two or more persons, whether fiduciaries, members of a partnership, co-tenants, husband and wife as community property, voting trustees, persons entitled to vote under a shareholder voting agreement or otherwise, or if two or more persons (including proxy holders) have the same fiduciary relationship respecting the same shares, unless the secretary of the corporation or other officer or agent entitled to tabulate votes is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one votes, such act binds all; (b) if more than one votes, the act of the majority so voting bind all; (c) if more than one votes, but the vote is evenly split on any particular matter, each fraction may vote the securities in question proportionately. If the instrument so filed or the registration of the shares shows that any tenancy is held in unequal interests, a majority or even split for the purpose of this Section shall be a majority or even split in interest. 2.12.4 The corporation is entitled to reject a vote, consent, waiver, proxy appointment or proxy appointment revocation if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. 2.12.5 The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, proxy appointment or proxy appointment revocation in good faith and in accordance with the standards of this Section are not liable in damages to the shareholder for the consequences of the acceptance or rejection. 2.12.6 Corporate action based on the acceptance or rejection of a vote, consent, waiver, proxy appointment or proxy appointment revocation under this Section is valid unless a court of competent jurisdiction determines otherwise. 2.13 Action by Shareholders Without a Meeting. 2.13.1 Written Consent. Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting and without prior notice if one or more consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shareholders entitled to vote with respect to the subject matter thereof were present and voted. Action taken under this Section has the same effect as action taken at a duly called and convened meeting of shareholders and may be described as such in any document. 2.13.2 Post-Consent Notice. Unless the written consents of all shareholders entitled to vote have been obtained, notice of any shareholder approval without a meeting shall be given at least ten days before the consummation of the action authorized by such approval to (i) those shareholders entitled to vote who did not consent in writing, and (ii) those shareholders not entitled to vote. Any such notice must be accompanied by the same material that is required under the Statutes to be sent in a notice of meeting at which the proposed action would have been submitted to the shareholders for action. 2.13.3 Effective Date and Revocation of Consents. No action taken pursuant to this Section shall be effective unless all written consents necessary to support the action are received by the corporation within a sixty-day period and not revoked. Such action is effective as of the date the last written consent is received necessary to effect the action, unless all of the written consents specify an earlier or later date as the effective date of the action. Any shareholder giving a written consent pursuant to this Section may revoke the consent by a signed writing describing the action and stating that the consent is revoked, provided that such writing is received by the corporation prior to the effective date of the action. 2.14 Voting for Directors. Unless otherwise provided in the articles of incorporation, every shareholder entitled to vote for the election of directors has the right to cast, in person or by proxy, all of the votes to which the shareholder's shares are entitled for as many persons as there are directors to be elected and for whom election such shareholder has the right to vote. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. ARTICLE 3. BOARD OF DIRECTORS 3.1 General Powers. Unless the articles of incorporation have dispensed with or limited the authority of the board of directors by describing who will perform some or all of the duties of a board of directors, all corporate powers shall be exercised by or under the authority, and the business and affairs of the corporation shall be managed under the direction, of the board of directors. 3.2 Number, Tenure and Qualification of Directors. The authorized number of directors shall be a minimum of one (1); provided, however, that if the corporation has less than two shareholders entitled to vote for the election of directors, the board of directors may consist of a number of individuals equal to or greater than the number of those shareholders. The current number of directors shall be within the limit specified above, as determined (or as amended form time to time) by a resolution adopted by either the shareholders or the directors. Each director shall hold office until the next annual meeting of shareholders or until the director's earlier death, resignation, or removal. However, if his term expires, he shall continue to serve until his successor shall have been elected and qualified, or until there is a decrease in the number of directors. Directors do not need to be residents of Nevada or shareholders of the corporation. 3.3 Regular Meetings of the Board of Directors. A regular meeting of the board of directors shall be held without other notice than this bylaw immediately after, and at the same place as, the annual meeting of shareholders, for the purpose of appointing officers and transacting such other business as may come before the meeting. The board of directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution. 3.4 Special Meetings of the Board of Directors. Special meetings of the board of directors may be called by or at the request of the chairman, president, secretary or any director. The person authorized to call special meetings of the board of directors may fix any place as the place for holding any special meeting of the board of directors. 3.5 Notice of, and Waiver of Notice for, Special Director Meeting. Unless the articles of incorporation provide for a longer or shorter period, notice of the date, time, and place of any special director meeting shall be given at least one day previously thereto either orally or in writing. Any director may waive notice of any meeting. Except as provided in the next sentence, the waiver must be in writing and signed by the director entitled to the notice. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business and at the beginning of the meeting (or promptly upon his arrival) objects to holding the meeting or transacting business at the meeting, and does not thereafter vote for or assent to action taken at the meeting. Unless required by the articles of incorporation, neither the business to be transacted at, nor the purpose of, any special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. 3.6 Director Quorum and Voting. 3.6.1 Quorum. A majority of the number of directors prescribed by resolution shall constitute a quorum for the transaction of business at any meeting of the board of directors unless the articles of incorporation require a greater percentage. Unless the articles of incorporation provide otherwise, any or all directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. A director who is present at a meeting of the board of directors or a committee of the board of directors when corporate action is taken is deemed to have assented to the action taken unless: (1) the director objects at the beginning of the meeting (or promptly upon his arrival) to holding or transacting business at the meeting and does not thereafter vote for or assent to any action taken at the meeting; and (2) the director contemporaneously requests his dissent or abstention as to any specific action be entered in the minutes of the meeting; or (3) the director causes written notice of his dissent or abstention as to any specific action be received by the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken. 3.7 Director Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a majority of the directors consent to such action in writing. Action taken by consent is effective when the last director signs the consent, unless, prior to such time, any director has revoked a consent by a signed writing received by the corporation, or unless the consent specifies a different effective date. A signed consent has the effect of a meeting vote and may be described as such in any document. 3.8 Resignation of Directors. A director may resign at any time by giving a written notice of resignation to the corporation. Such resignation is effective when the notice is received by the corporation, unless the notice specifies a later effective date. 3.9 Removal of Directors. The shareholders may remove one or more directors at a meeting called for that purpose if notice has been given that a purpose of the meeting is such removal. The removal may be with or without cause unless the articles of incorporation provide that directors may only be removed with cause. 3.10 Board of Director Vacancies. Unless the articles of incorporation provide otherwise, if a vacancy occurs on the board of directors, including a vacancy resulting from an increase in the number of directors, the shareholders may fill the vacancy. During such time that the shareholders fail or are unable to fill such vacancies then and until the shareholders act: (a) the board of directors may fill the vacancy; or (b) if the board of directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. If the vacant office was held by a director elected by a voting group of shareholders: (a) if there are one or more directors elected by the same voting group, only such directors are entitled to vote to fill the vacancy if it is filled by the directors; and (b) only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders. A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs. 3.11 Director Compensation. By resolution of the board of directors, each director may be paid his expenses, if any, of attendance at each meeting of the board of directors and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the board of directors or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. 3.12 Director Committees. 3.12.1 Creation of Committees. Unless the article sof incorporation provide otherwise, the board of directors may create one or more committees and appoint members of the board of directors to serve on them. Each committee must have one or more members, who shall serve at the pleasure of the board of directors. 3.12.2 Selection of Members. The creation of a committee and appointment of members to it must be approved by the greater of (1) a majority of all the directors in office when the action is taken or (2) the number of directors required by the articles of incorporation to take such action. 3.12.3 Required Procedures. Those Sections of this Article 3 which govern meetings, actions without meetings, notice and waiver of notice, quorum and voting requirements of the board of directors, apply to committees and their members. 3.12.4 Authority. Unless limited by the articles of incorporation, each committee may exercise those aspects of the authority of the board of directors which the board of directors confers upon such committee in the resolution creating the committee. Provided, however, a committee may not: (a) authorize distributions; (b) approve or propose to shareholders action that the Statutes require be approved by shareholders; (c) fill vacancies on the board of directors or on any of its committees; (d) amend the articles of incorporation pursuant to the authority of directors to do so; (e) adopt, amend or repeal bylaws; (f) approve a plan of merger not requiring shareholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the board of directors; or (h) authorize or approve the issuance or sale or contract for sale of shares or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the board of directors may authorize a committee (or an officer) to do so within limits specifically prescribed by the board of directors. ARTICLE 4. OFFICERS 4.1 Number of Officers. The officers of the corporation shall be a president, a secretary and a treasurer, each of whom shall be appointed by the board of directors. Such other officers and assistant officers as may be deemed necessary, including any vice presidents, may also be appointed by the board of directors. If specifically authorized by the board of directors, an officer may appoint one or more officers or assistant officers. The same individual may simultaneously hold more than one office in the corporation. 4.2 Appointment and Term of Office. The officers of the corporation shall be appointed by the board of directors for a term as determined by the board of directors. If no term is specified, they shall hold office until the first meeting of the directors held after the next annual meeting of shareholders. If the appointment of officers shall not be made at such meeting, such appointment shall be made as soon thereafter as is convenient. Each officer shall hold office until his successor shall have been duly appointed and shall have qualified until his death, or until he shall resign or is removed. The designation of a specified term does not grant to the officer any contract rights, and the board may remove the officer at any time prior to the termination of such term. 4.3 Removal of Officers. Any officer or agent may be removed by the board of directors at any time, with or without cause. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Appointment of an officer or agent shall not of itself create contract rights. 4.4 Resignation of Officers. Any officer may resign at any time, subject to any rights or obligations under any existing contracts between the officers and the corporation, by giving notice to the president or board of directors. An officer's resignation shall take effect at the time specified therein, and the acceptance of such resignation shall not be necessary to make it effective. 4.5 President. The President shall in general supervise and control all of the business and affairs of the corporation. Unless there is a chairman of the board, the president shall, when present, preside at all meetings of the shareholders. The president may sign, with the secretary or any other proper officer of the corporation thereunder authorized by the board of directors, certificates for shares of the corporation or other instruments which the board of directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the board of directors or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the board of directors from time to time. 4.6 Chief Executive Officers. Unless there is a chairman of the board, the CEO shall, when present, preside at all meetings of the board of directors. The CEO may sign, with the president and/or secretary or any other proper officer of the corporation thereunder authorized by the board of directors, deeds, mortgages, bonds, contracts, or other instruments which the board of directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the board of directors or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of CEO and such other duties as may be prescribed by the board of directors from time to time. 4.7 Vice Presidents. If appointed, in the absence of the president or in the event of his death, inability or refusal to act, the vice president (or in the event there be more than one vice president, the vice presidents in the order designate at the time of their election, or in the absence of any designation, then in the order of their appointment) shall perform the duties of the president, and when so acting, shall have all the powers of, and be subject to, all the restrictions upon the president. 4.8 Secretary. The secretary shall: (a) keep the minutes of the proceedings of the shareholders, the board of directors, and any committees of the board in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records; (d) when requested or required, authenticate any records of the corporation; (e) keep a register of the post office address of each shareholder which shall be furnished to the secretary by such shareholder; (f) sign with the president, or a vice president, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the board of directors; (g) have general charge of the stock transfer books of the corporation; and (h) in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned by the president or by the board of directors. Assistant secretaries, if any, shall have the same duties and powers, subject to the supervision of the secretary. 4.9 Treasurer. The treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for monies due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such bank, trust companies, or other depositaries as shall be selected by the board of directors; and (c) in general perform all of the duties incident to the office of treasurer and such other duties as from time to time may be assigned by the president or by the board of directors. If required by the board of directors, the treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the board of directors shall determine. Assistant treasurers, if any, shall have the same powers and duties, subject to the supervision of the treasurer. 4.10 Salaries. The salaries of the officers shall be fixed from time to time by the board of directors. ARTICLE 5. INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS, AND EMPLOYEES 5.1 Indemnification of Directors. Unless otherwise provided in the articles of incorporation, the corporation shall indemnify any individual made a party to a proceeding because the individual is or was a director of the corporation, against liability incurred in the proceeding, but only if such indemnification is both (i) determined permissible and (ii) authorized, as such are defined in subsection (a) of this Section 5.1. 5.1.1 Determination of Authorization. The corporation shall not indemnify a director under this Section unless: (a) a determination has been made in accordance with the procedures set forth in the Statutes that the director met the standard of conduct set forth in subsection (b) below, and (b) payment has been authorized in accordance with the procedures set forth in the Statutes based on a conclusion that the expenses are reasonable, the corporation has the financial ability to make the payment, and the financial resources of the corporation should be devoted to this use rather than some other use by the corporation. 5.1.2 Standard of Conduct. The individual shall demonstrate that: (a) he or she conducted himself in good faith; and (b) he or she reasonably believed: (i) in the case of conduct in his official capacity with the corporation, that his conduct was in its best interests; (ii) in all other cases, that his conduct was at least not opposed to its best interests; and (iii) in the case of any criminal proceeding, he or she had no reasonable cause to believe his conduct was unlawful. 5.1.3 Indemnification in Derivative Actions Limited. Indemnification permitted under this Section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding. 5.1.4 Limitation on Indemnification. The corporation shall not indemnify a director under this Section of Article 5: (a) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (b) in connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in his or her official capacity, in which he or she was adjudged liable on the basis that personal benefit was improperly received by the director. 5.2 Advance of Expenses for Directors. If a determination is made following the procedures of the Statutes, that the director has met the following requirements, and if an authorization of payment is made following the procedures and standards set forth in the Statutes, then unless otherwise provided in the articles of incorporation, the corporation shall pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding, if: (a) the director furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct described in this section; (b) the director furnishes the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct; (c) a determination is made that the facts then known to those making the determination would not preclude indemnification under this Section or the Statutes. 5.3 Indemnification of Officers, Agents and Employees Who Are Not Directors. Unless otherwise provided in the articles of incorporation, the board of directors may indemnify and advance expenses to any officer, employee, or agent of the corporation, who is not a director of the corporation, to the same extent as to a director, or to any greater extent consistent with public policy, as determined by the general or specific actions of the board of directors. 5.4 Insurance. By action of the board of directors, notwithstanding any interest of the directors in such action, the corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary or agent of the corporation, against any liability asserted against or incurred by such person in that capacity or arising from such person's status as a director, officer, employee, fiduciary, or agent, whether or not the corporation would have the power to indemnify such person under the applicable provisions of the Statutes. ARTICLE 6. STOCK 6.1 Issuance of Shares. The issuance or sale by the corporation of any shares of its authorized capital stock of any class or preferences, including treasury shares, shall be made only upon authorization by the board of directors, unless otherwise provided by statute. The board of directors may authorize the issuance of shares for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts or arrangements for services to be performed, or other securities of the corporation. Shares shall be issued for such consideration expressed in dollars as shall be fixed from time to time by the board of directors. 6.2 Certificates for Shares. 6.2.1 Content. Certificates representing shares of the corporation shall at minimum, state on their face the name of the issuing corporation and that it is formed under the laws of the State of Nevada; the name of the person to whom issued; and the number and class of shares and the designation of the series, if any, the certificate represents; and be in such form as determined by the board of directors. Such certificates shall be signed (either manually or by facsimile) by the president or a vice president and by the secretary or an assistant secretary and may be sealed with a corporate seal or a facsimile thereof. Each certificate for shares shall be consecutively numbered or otherwise identified. 6.2.2 Legend as to Class or Series. If the corporation is authorized to issue different classes of shares or different series within a class, the designations, relative rights, preferences and limitations applicable to each class and the variations in rights, preferences and limitations determined for each series (and the authority of the board of directors to determine variations for future series) must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish the shareholder this information on request in writing and without charge. 6.2.3 Shareholder List. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. 6.2.4 Transferring Shares. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed, or mutilated certificate, a new one may be issued therefor upon such terms and indemnity to the corporation as the board of directors may prescribe. 6.3 Shares Without Certificates. 6.3.1 Issuing Shares Without Certificates. Unless the articles of incorporation provide otherwise, the board of directors may authorize the issue of some or all the shares of any or all of its classes or series without certificates. This authorization does not affect shares already represented by certificates until they are surrendered to the corporation. 6.3.2 Information Statement Required. Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send the shareholder a written statement containing, at a minimum, the information required by the Statutes. 6.4 Registration of the Transfer of Shares. Registration of the transfer of shares of the corporation shall be made only on the stock transfer books of the corporation. In order to register a transfer, the record owner shall surrender the shares to the corporation for cancellation, properly endorsed by the appropriate person or persons with reasonable assurances that the endorsements are genuine and effective. Unless the corporation has established a procedure by which a beneficial owner of shares held by a nominee is to be recognized by the corporation as the owner, the person in whose name shares stand in the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. 6.5 Restrictions on Transfer or Registration of Shares. The board of directors or shareholders may impose restrictions on the transfer or registration of transfer of shares (including any security convertible into, or carrying a right to subscribe for or acquire shares). A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of or otherwise consented to the restriction. A restriction on the transfer or registration of transfer of shares may be authorized: (a) to maintain the corporation's status when it is dependent on the number or identity of its shareholders; (b) to preserve entitlements, benefits or exemptions under federal or local laws; and (c) for any other reasonable purpose. A restriction on the transfer or registration of transfer of shares may: (a) obligate the shareholder first to offer the corporation or other persons (separately, consecutively or simultaneously) an opportunity to acquire the restricted shares; (b) obligate the corporation or other persons (separately, consecutively or simultaneously) to acquire the restricted shares; (c) require as a condition to such transfer or registration, that any one or more persons, including the holders of any of its shares, approve the transfer or registration if the requirement is not manifestly unreasonable; or (d) prohibit the transfer or the registration of transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable. A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this Section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by this Article 6 with regard to shares issued without certificates. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction. 6.6 Corporation's Acquisition of Shares. The corporation may acquire its own shares and the shares so acquired constitute authorized but unissued shares. If the articles of incorporation prohibit the reissue of acquired shares, the number of authorized shares is reduced by the number of shares acquired, effective upon amendment of the articles of incorporation, which amendment may be adopted by the shareholders or the board of directors without shareholder action. The articles of amendment must be delivered to the Secretary of State and must set forth: (a) the name of the corporation; (b) the reduction in the number of authorized shares, itemized by class and series; (c) the total number of authorized shares, itemized by class and series, remaining after reduction of the shares; and (d) a statement that the amendment was adopted by the board of directors without shareholder action and that shareholder action was not required. ARTICLE 7. DISTRIBUTIONS 7.1 Distributions to Shareholders. The board of directors may authorize, and the corporation may make, distributions to the shareholders of the corporation subject to any restrictions in the corporation's articles of incorporation and in the Statutes. 7.2 Unclaimed Distributions. If the corporation has mailed three successive distributions to a shareholder at the shareholder's address as shown on the corporation's current record of shareholders and the distributions have been returned as undeliverable, no further attempt to deliver distributions to the shareholder need be made until another address for the shareholder is made known to the corporation, at which time all distributions accumulated by reason of this Section, except as otherwise provided by law, be mailed to the shareholder at such other address. ARTICLE 8. MISCELLANEOUS 8.1 Inspection of Records by Shareholders and Directors. A shareholder or director of a corporation is entitled to inspect and copy, during regular business hours at the corporation's principal office, any of the records of the corporation required to be maintained by the corporation under the Statutes, if such person gives the corporation written notice of the demand at least five business days before the date on which such a person wishes to inspect and copy. The scope of such inspection right shall be as provided under the Statutes. 8.2 Corporate Seal. The board of directors may provide a corporate seal which may be circular in form and have inscribed thereon any designation including the name of the corporation, the state of incorporation, and the words "Corporate Seal." 8.3 Amendments. The corporation's board of directors may amend or repeal the corporation's bylaws at any time unless: (a) the articles of incorporation or the Statutes reserve this power exclusively to the shareholders in whole or part; or (b) the shareholders in adopting, amending, or repealing a particular bylaw provide expressly that the board of directors may not amend or repeal that bylaw; or (c) the bylaw either establishes, amends, or deletes, a greater shareholder quorum or voting requirement. Any amendment which changes the voting or quorum requirement for the board must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever are greater. 8.4 Fiscal Year. The fiscal year of the corporation shall be established by the board of directors. /s/ William Smith By: ________________________________ William Smith, Secretary EX-31.1 5 viewex311.txt CHIEF EXECUTIVE OFFICER CERTIFICATION Exhibit 31.1 CHIEF EXECUTIVE OFFICER CERTIFICATION I, Gunther Than, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of View Systems, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which statements were made, not misleading with respect to the period covered by this quarterly 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 small business issuer as of, and for, the periods presented in this report. 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer 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 small business issuer, 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) Evaluated the effectiveness of the small business issuer's 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 (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuers's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent function): (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 small business issuer'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 small business issuer's internal control over financial reporting. /s/ Gunther Than Date: November 13, 2003 _____________________________________ Gunther Than, Chief Executive Officer EX-31.2 6 viewex312.txt PRINCIPAL FINANCIAL OFFICER CERTIFICATION Exhibit 31.2 PRINCIPAL FINANCIAL OFFICER CERTIFICATION I, Gunther Than, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of View Systems, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which statements were made, not misleading with respect to the period covered by this quarterly 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 small business issuer as of, and for, the periods presented in this report. 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer 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 small business issuer, 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) Evaluated the effectiveness of the small business issuer's 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 (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuers's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent function): (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 small business issuer'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 small business issuer's internal control over financial reporting. /s/ Gunther Than Date: November 13, 2003 ________________________________________ Gunther Than, Principal Financial Officer EX-32.1 7 viewex321.txt SECTION 1350 CERTIFICATION Exhibit 32.1 VIEW SYSTEMS, INC. CERTIFICATION OF PERIODIC REPORT Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350 I, Gunther Than, Chief Executive Officer and Principal Financial Officer of View Systems, Inc. certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (A) the quarterly report on Form 10-QSB of the Company for the quarter ended September 30, 2003, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (B) the information contained in the Form 10-QSB fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 13, 2003 /s/ Gunther Than ________________________________ Gunther Than Chief Executive Officer Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----