-----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, NatDfcPT+mbmsvajNBoB9YhzkPGDGqeLsNK1F9pwORz3aLpbnrC3CdUEUDDR9GHu KjKV8qs5NLuA/ISB8arvJA== 0001023175-05-000239.txt : 20051110 0001023175-05-000239.hdr.sgml : 20051110 20051110170136 ACCESSION NUMBER: 0001023175-05-000239 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051110 DATE AS OF CHANGE: 20051110 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: 051194736 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, 2005 [ ] 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.) 1550 Caton Center Drive, Suite E, Baltimore, Maryland 21227 - ----------------------------------------------------------- (Address of principal executive offices) Issuer's telephone number: (410) 242-8439 -------------- 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 [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of October 25, 2005, View Systems, Inc. had 86,382,422 shares of common stock outstanding. Transitional small business disclosure format: Yes [ ] No [X] TABLE OF CONTENTS PART I: FINANCIAL INFORMATION Item 1. Financial Statements..............................................2 Item 2. Management's Discussion and Analysis or Plan of Operation.........8 Item 3. Controls and Procedures..........................................12 PART II: OTHER INFORMATION Item 6. Exhibits.........................................................12 Signatures................................................................13 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, 2005 and 2004 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, 2005 are not necessarily indicative of results to be expected for any subsequent period. 2 View Systems, Inc. and Subsidiaries Consolidated Balance Sheets ASSETS September 30, December 31, 2005 2004 -------------- ------------- Current Assets Cash $ 4,109 $ 173,486 Accounts Receivable (Net of allowance of $20,054 at December 31, 2004) 146,973 108,342 Inventory 26,197 61,197 -------------- ------------- Total current assets 177,279 343,025 -------------- ------------- Property & Equipment (Net) 20,521 14,803 -------------- ------------- Other Assets Licenses 1,626,854 1,626,854 Loans to Shareholder 62,000 66,500 Due from Affiliates 107,575 98,457 Deposits 5,191 2,319 -------------- ------------- Total Other Assets 1,801,620 1,794,130 -------------- ------------- Total Assets $ 1,999,420 $ 2,151,958 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable $ 134,547 $ 331,776 Accrued Expenses 15,238 100,548 Accrued Interest 74,100 66,000 Notes Payable 101,000 149,000 -------------- ------------- Total Current Liabilities 324,885 647,324 -------------- ------------- Stockholders' Equity Preferred Stock, Authorized 10,000,000 Shares, $.01 Par Value, Issued and Outstanding 7,171,725 71,717 - Common Stock, Authorized 100,000,000 Shares, $0.001 Par Value, Issued and Outstanding 85,100,422 85,101 - Issued and Outstanding 76,533,922 - 76,534 Additional Paid in Capital 17,687,580 17,119,596 Retained Earnings (Deficit) (16,169,863) (15,691,496) -------------- ------------- Total Stockholders' Equity 1,674,535 1,504,634 -------------- ------------- Total Liabilities and Stockholders' Equity $ 1,999,420 $ 2,151,958 ============== ============= The accompanying notes are an integral part of these consolidated financial statements. 3
View Systems, Inc. and Subsidiaries Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 2005 2004 2005 2004 ---------------- --------------- --------------- -------------- Revenues, Net $ 338,941 $ 188,029 $ 820,497 $ 380,423 Cost of Sales 109,541 32,765 339,049 138,963 ---------------- --------------- --------------- -------------- Gross Profit (Loss) 229,400 155,264 481,448 241,460 ---------------- --------------- --------------- -------------- Operating Expenses Business development 28,218 - 60,864 - General & Administrative 57,724 184,259 151,744 564,937 Professional Fees 323,466 11,972 393,322 94,146 Salaries and Benefits 111,021 98,806 345,386 339,016 ---------------- --------------- --------------- -------------- Total operating expenses 520,429 295,037 951,316 998,099 ---------------- --------------- --------------- -------------- Net Operating Income (Loss) (291,029) (139,773) (469,868) (756,639) ---------------- --------------- --------------- -------------- Other Income (Expense) Interest Expense (2,961) (2,958) (8,499) (31,269) ---------------- --------------- --------------- -------------- Total Other Income (Expense) (2,961) (2,958) (8,499) (31,269) ---------------- --------------- --------------- -------------- Net Income (Loss) $ (293,990) $ (142,731) $ (478,367) $ (787,908) ================ =============== =============== ============== Net Income (Loss) Per Share $ (0.00) $ 0.00 $ (0.01) $ (0.01) ================ =============== =============== ============== Weighted Average Shares Outstanding 83,304,922 70,341,359 79,990,172 65,895,908 ================ =============== =============== ============== The accompanying notes are an integral part of these consolidated financial statements. 4
View Systems, Inc. and Subsidiaries Consolidated Statements of Stockholders' Equity (Deficit) Additional Retained Preferred Stock Common Stock Paid-in Earnings Shares Amount Shares Amount Capital (Deficit) -------------- ---------- ------------- ---------- ------------- ------------- Balance, December 31, 2003 - - 62,730,619 $ 62,730 $ 15,604,609 $(14,505,017) Cancellation of shares - - (100,000) (100) (4,900) - January - March 2004 - shares issued for cash - - 244,500 245 34,755 - January - March 2004 - shares issued for services - - 932,000 932 203,048 - April - June 2004 - shares issued for cash - - 84,333 84 11,916 - April - June 2004 - shares issued for services - - 221,250 221 39,979 - June 2004 - shares issued for payment of notes payable and accrued interest - - 5,221,050 5,221 516,884 - July - September 2004 - shares issued for cash - - 100,000 100 19,900 - July - September 2004 - shares issued for services - - 781,600 782 108,642 - September 2004 - shares issued in settlement of litigation - - 2,000,000 2,000 178,000 - October - December 2004 - shares issued for cash - - 1,066,750 1,067 89,833 - December 2004 - shares issued for payment of notes payable and accrued interest - - 3,251,820 3,252 321,930 - Cost of issuance of common stock - - - - (5,000) - Net loss for the year ended December 31, 2004 - - - - - (1,186,479) -------------- ---------- ------------- ---------- ------------- ------------- Balance, December 31, 2004 - - 76,533,922 76,534 17,119,596 (15,691,496) January - March 2005 - shares issued for cash - - 155,000 155 15,345 - January - March 2005 - shares issued in payment of accounts payable - - 128,000 128 18,872 - April - June 2005 - shares issued for cash - - 2,287,500 2,288 114,713 - April - June 2005 - shares issued for services - - 2,405,000 2,405 68,745 - July - September 2005 - shares issued for cash - - 612,000 612 55,588 - July - September 2005 - shares issued for services - - 2,979,000 2,979 294,721 - July - September 2005 - shares issued in payment of notes payable 4,800,000 48,000 - - - - July - September 2005 - shares issued for services 2,371,725 23,717 - - - - Net loss for the period ended September 30, 2005 - - - - - (478,367) -------------- ---------- ------------- ---------- ------------- ------------- Balance, September 30, 2005 7,171,725 $ 71,717 85,100,422 $ 85,100 $ 17,687,580 $(16,169,863) ============== ========== ============= ========== ============= ============= 5
Cash Flows from Operating Activities: Net Income (Loss) $ (478,367) $ (787,908) Adjustments to Reconcile Net Loss to Net Cash Provided by Operations: Depreciation and Amortization 7,379 23,690 Stock Issued for Services 392,567 348,804 Loss on Settlement of Debt - 3,750 Changes in Operating Assets and Liabilities: (Increase) Decrease in: Accounts Receivable (38,631) (34,197) Inventory 35,000 - Deposits (2,872) - Increase (Decrease) in: Accounts Payable (178,229) (106,373) Accrued Expenses (77,210) (39,971) --------------- -------------- Net Cash Used by Operating Activities (340,363) (592,205) --------------- -------------- Cash Flows from Investing Activities: Purchases of Equipment (13,096) - Funds Advanced (to) from Affiliated Entities (9,118) - --------------- -------------- Net Cash Used in Investing Activities (22,214) - --------------- -------------- Cash Flows from Financing Activities: Funds Advanced (to) from Stockholders 4,500 591,685 Proceeds from Stock Issuance 188,700 80,500 --------------- -------------- Net Cash Provided by Financing Activities 193,200 672,185 --------------- -------------- Increase (Decrease) in Cash (169,377) 79,980 Cash and Cash Equivalents at Beginning of Period 173,486 19,899 --------------- -------------- Cash and Cash Equivalents at End of Period $ 4,109 $ 99,879 =============== ============== Cash Paid For: Interest $ 399 $ - Income Taxes $ - $ - Non-Cash Activities: Stock Issued in Payment of Accounts Payable $ 19,000 $ 180,000 Stock Issued for Notes Payable and Accrued Interest $ 48,000 $ 522,105 The accompanying notes are an integral part of these consolidated financials 6
View Systems, Inc. Notes to the Consolidated Financial Statements September 30, 2005 GENERAL View Systems, Inc. (the Company) has elected to omit substantially all footnotes to the financial statements for the nine months ended September 30, 2005 since there have been no material changes (other than indicated in other footnotes) to the information previously reported by the Company in their Annual Report filed on the Form 10-KSB for the twelve months ended December 31, 2004. PREFERRED STOCK In July 2005 the Company issued 7,171,725 shares of Series A Preferred Stock in payment of notes payable and for services. The issuance had been previously authorized by the Board of Directors. Each share of Series A Preferred Stock has a liquidation preference, in the event of liquidation of the corporation, of $0.01 per share before any payment or distribution is made to the holders of common stock. The Series A Preferred has no conversion rights into common stock. Each share of Series A Preferred is entitled to fifteen votes and shall be entitled to vote on any matters brought to a vote on the common stock shareholders. UNAUDITED INFORMATION The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustments which are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year. 7 In this report references to "View Systems," "we," "us," and "our" refer to View Systems, Inc. and its subsidiaries. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as "may," "will," "expect," "believe," "anticipate," "estimate," "project," or "continue" or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS EXECUTIVE OVERVIEW View Systems acquires, develops and markets technologies related to surveillance, detection and security for the purpose of commercializing them. We offer: .. Visual First Responder - a lightweight, wireless camera system housed in a tough, waterproof flashlight body. .. SecureScan Concealed Weapons Detection System - a walk-through concealed weapons detector which uses sensing technology and artificial intelligence algorithms to accurately pinpoint the location, size and number of concealed weapons. .. ViewMaxx Digitial Video products - a high-resolution, digital video recording and real-time monitoring system. In 2004 we worked diligently to make engineering design changes to the SecureScan product to accommodate the price points required by competitive pressures. In 2005 we contracted with the University of Northern Florida to design new sensor boards for the SecureScan product which allowed us to reduce the installed sensor cost by a factor of four. The new lower costs allow us to offer price points to the market which compete directly with traditional metal detectors. We believe the new reduced price points and the enhanced interface abilities of our products will allow us to be more competitive. During 2005 we have continued to provide live demonstrations of our SecureScan product at sporting and entertainment venues, expos, and at state corrections facilities. We also have provided demonstrations of our Visual First Responder for police and civil support teams. These demonstrations have raised interest in our products and resulted in increased orders of our products. During 2005 we continue to establish new partnerships, add active resellers and dealers and we hired four sales representatives to build a United States domestic network for the sale and distribution of our products within the 48 states. However, we cannot assure you that we will be able to develop these sales and distribution channels to a level which will result in increased revenues or continued profitability. In August 2005 we contracted with Inter-Connect Electronics, Inc. to manufacture and assemble our Visual First Responder units. We have also contracted with Sports Field Specialties, LLC, an experienced manufacturer, to build the SecureScan line. These manufacturing agreements allowed us to outsource our manufacturing which reduced our labor cost and cleared our backlog for our product lines. For the next twelve months our primary challenge will be to more fully develop our sales and distribution network for the United States. In October we established an account executive in New York and in November we established a sales and service office in New Jersey. Management anticipates that these actions will improve sales in those geographical areas. 8 LIQUIDITY AND CAPITAL RESOURCES While our revenues are increasing each quarter, we are unable to satisfy our operating expenses with revenues alone. Net cash used by operating activities was $340,363 for the nine month period ended September 30, 2005 (the "2005 nine month period") compared to $592,205 for the nine month period ended September 30, 2004 (the "2004 nine month period"). For the short term, management believes that revenues, advances from shareholders and sales of our common stock will provide funds for operations and further development of our business plan. For the long term, management expects that the development of our sales and distribution channels will increase our revenues; however, we will need to continue to raise additional funds through loans and sales of our common stock, as needed. FINANCING We have financed our operations primarily through revenues and private financing. Net cash provided by financing activities for the 2005 nine month period was $193,200, primarily from proceeds from sales of common stock. Net cash provided by financing activities for the 2004 nine month period was $672,185, with $591,685 of that amount related to funds advanced by stockholders. We estimate that we will require additional financing of approximately $500,000 to meet our needs for the next six months. We intend to use this financing to increase ongoing operations to self-sustaining levels and increase profits. Management believes that it will be essential to continue to raise additional capital, both internally and externally, to compete in our markets. We cannot assure you 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. COMMITMENTS AND CONTINGENT LIABILITIES Our base rent for operating leases related to our principal office and manufacturing facility is approximately $2,300 per month, with an annual rent escalator of 3%. At December 31, 2004, future minimum payments for operating leases related to our office and manufacturing facility were $19,964 through 2006. Our total current liabilities of $324,885 at September 30, 2005 included accounts payable of $134,547, accrued expenses of $15,238, accrued interest of $74,100 and notes payable of $101,000. OFF-BALANCE SHEET ARRANGEMENTS None. RESULTS OF OPERATIONS The following discussions are based on the unaudited consolidated financial statements of View Systems and its subsidiaries. These charts and discussions summarize our financial statements for the three and nine month periods ended September 30, 2004 and 2005 and should be read in conjunction with the financial statements, and notes thereto, included with this report at Part I, Item 1, above. Summary Comparison of Three and Nine Month Period Operations ------------------------------------------------------------- Three month Three month Nine month Nine month period ended period ended period ended period ended Sept. 30, 2005 Sept. 30, 2004 Sept. 30, 2005 Sept. 30, 2004 -------------- -------------- -------------- -------------- 9 Revenues, net $ 338,941 $ 188,029 $ 820,497 $ 380,423 Cost of sales 109,541 32,765 339,049 138,963 Gross profit 229,400 155,264 481,448 241,460 Total operating expenses 520,429 295,037 951,316 998,099 Total other income (expense) (2,961) (2,958) (8,499) (31,269) Net income (loss) (293,990) (142,731) (478,367) (787,908) Net earnings (loss) per share $ (0.00) $ (0.00) $ (0.01) $ (0.01) Due to increased sales of our products, revenues for the three month period ended September 30, 2005 (the "2005 third quarter") increased 180.1% compared to the three month period ended September 30, 2004 (the "2004 third quarter"). Revenues for the 2005 nine month period increased 115.7% compared to the 2004 nine month period. However, costs of sales also increased 234.3% for the 2005 third quarter compared to the 2004 third quarter and they increased 144.0% for the 2005 nine month period compared to the 2004 nine month period. Despite the increase in cost of sales, the increased revenues resulted in a gross profit increase of 47.7% for the 2005 third quarter compared to the 2004 third quarter and an increase of 99.4% for the 2005 nine month period compared to the 2004 nine month period. For the 2005 third quarter total operating expense increased 76.4% compared to the 2004 third quarter. The increase in the 2005 third quarter was primarily a result of additional business development expenses and increased professional fees. For the 2005 nine month period total operating expense decreased 4.7% compared to the 2004 nine month period. This decrease was primarily the result of a 73.1%, decrease in general and administrative expenses. Total other expense for the 2005 and 2004 comparable periods was related to interest on loans. As a result of the above, our net loss increased 106.0% for the 2005 third quarter compared to the 2004 third quarter, but decreased 39.3% for the 2005 nine month period compared to the 2004 nine month period. The following chart summarizes our balance sheet at September 30, 2005 and December 31, 2004 Summary Balance Sheet ------------------------- For nine month period ended For the year ended September 30, 2005 December 31, 2004 ------------------ ------------------ Cash and cash equivalents $ 4,109 $ 173,486 Total current assets 177,279 343,025 Total assets 1,999,420 2,151,958 Total current liabilities 324,885 647,324 Retained earnings (Deficit) (16,169,863) (15,691,496) Total stockholders equity $ 1,674,535 $ 1,504,634 10 Our total assets decreased at September 30, 2005 primarily as a result of decreases in cash and inventory. Total current liabilities decreased primarily due to decreases in accounts payable and accrued expenses. In September 2005 three investors paid accounts payable totaling $237,357 on our behalf. In consideration for this payment we issued an aggregate of 2,390,000 shares to the investors. Of the 2,390,000 shares, Starr Consulting, Inc. received 597,500 shares for paying $60,000 of the debt, Power Network, Inc. received 597,500 shares for paying $60,000 of the debt, and YT2K, Inc. received 1,195,000 shares for paying $120,000 of debt. We filed a registration statement on Form SB-2 to register the 2,390,000 shares; however, the registration statement has not been declared effective as of the date of this filing pending SEC review. FACTORS AFFECTING FUTURE PERFORMANCE Our independent auditors have expressed concern whether we can continue as a going concern. We have incurred ongoing operating losses and do not currently have financing commitments in place to meet expected cash requirements for the next twelve months. We are unable to fund our day-to-day operations through revenues alone and management believes we will incur operating losses for the near future while we expand our sales channels. While we have expanded our product line and expect to establish new sales channels, we may be unable to increase revenues to the point that we attain and are able to maintain profitability. We need additional external capital and may be unable to raise it. Based on our current growth plan we believe we may require approximately $500,000 in additional financing within the next twelve months to develop our sales channels. Our success will depend upon our ability to access equity capital markets and borrow on terms that are financially advantageous to us. However, we may not be able to obtain additional funds on acceptable terms. If we fail to obtain funds on acceptable terms, then we might be forced to delay or abandon some or all of our business plans or may not have sufficient working capital to develop products, finance acquisitions, or pursue business opportunities. If we borrow funds, then we could be forced to use a large portion of our cash reserves, if any, to repay principal and interest on those loans. If we issue our securities for capital, then the interests of investors and stockholders will be diluted. We are currently dependent on the efforts of resellers for our continued growth and must expand our sales channels to increase our revenues and further develop our business plans. We are in the process of developing and expanding our sales channels, but we expect overall sales to remain down as we develop these sales channels. We are actively recruiting additional resellers and dealers and have hired in-house sales personnel for regional and national sales. We must continue to find other methods of distribution to increase our sales. If we are unsuccessful in developing sales channels we may have to abandon our business plan. We may not be able to compete successfully in our market because we have a small market share and compete with large national and international companies. We estimate that we have less than a 1% market share of the surveillance and weapons detection market. We compete with many companies that have greater brand name recognition and significantly greater financial, technical, marketing, and managerial resources. The position of these competitors in the market may prevent us from capturing more market share. We intend to remain competitive by increasing our existing business through marketing efforts, selectively acquiring complementary technologies or businesses and services, increasing our efficiency, and reducing costs. Our revenues are dependent in part upon our relationships and alliances with government agencies and partners. While we own exclusive licenses for the SecureScan technology, we are dependent upon the continuation of the ongoing contract between the Department of Energy and National Institute of Justice for continuations and 11 improvements to the concealed weapons detection technology. We are also reliant upon the Department of Energy and National Institute of Justice for continuations and improvements to the Visual First Responder. If either of these entities should discontinue its operations or research and development we may lose our competitive edge in our market. We must successfully introduce new or enhanced products and manage the costs associated with producing several product lines to be successful. Our future success depends on our ability to continue to improve our existing products and to develop new products using the latest technology that can satisfy customer needs. For example, our short term success will depend on the continued acceptance of the Visual First Responder and the SecureScan portal product line. We cannot be certain that we will be successful at producing multiple product lines and we may find that the cost of production of multiple product lines inhibits our ability to maintain or improve our gross profit margins. In addition, the failure of our products to gain or maintain market acceptance or our failure to successfully manage our cost of production could adversely affect our financial condition. Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could lead to loss of investor confidence in our reported financial information. Pursuant to proposals related to Section 404 of the Sarbanes-Oxley Act of 2002, beginning with our Annual Report on Form 10-KSB for the fiscal year ending December 31, 2007, we will be required to furnish a report by our management on our internal control over financial reporting. If we cannot provide reliable financial reports or prevent fraud, then our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly. In order to achieve compliance with Section 404 of the Act within the prescribed period, we will need to engage in a process to document and evaluate our internal control over financial reporting, which will be both costly and challenging. In this regard, management will need to dedicate internal resources, engage outside consultants and adopt a detailed work plan. During the course of our testing we may identify deficiencies which we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. ITEM 3. CONTROLS AND PROCEDURES Our Chief Executive Officer, who also acts in the capacity of principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, he concluded that our disclosure controls and procedures were effective. Also, our Chief Executive Officer determined that there were no changes made in our internal controls over financial reporting during the third quarter of 2005 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. PART II: OTHER INFORMATION ITEM 6. EXHIBITS 12 Part I Exhibits 31.1 Chief Executive Officer Certification 31.2 Principal Financial Officer Certification 32.1 Section 1350 Certification Part II Exhibits 3.1 Articles of Incorporation of View Systems, as amended (Incorporated by reference to exhibit 3.1 to Form 10-QSB filed November 14, 2003) 3.2 By-Laws of View Systems (Incorporated by reference to exhibit 3.2 to Form 10-QSB filed November 14, 2003) 4.1 View Systems 2005(B) Professional/Consultant Compensation Plan, dated November 7, 2005 (Incorporated by reference to exhibit 4.1 to Form S-8, filed November 8, 2005 10.1 Employment agreement between View Systems and Gunther Than, dated January 1, 2003. (Incorporated by reference to exhibit 10.3 to Form 10-KSB, filed April 14, 2004) 10.2 Lease agreement between View Systems and MIE Properties, Inc., dated August 3, 2005 21.1 Subsidiaries (Incorporated by reference to exhibit 21.1 to Form 10-KSB, filed March 31, 2003) 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 10, 2005 By:_________________________________________ Gunther Than Chief Executive Officer, Treasurer, Director, Principal Financial and Accounting Officer /s/ Michael L. Bagnoli Date: November 10, 2005 By:_________________________________________ Michael L. Bagnoli Secretary and Director 13 EX-10.2 2 viewlease.txt LEASE AGREEMENT, DATED AUGUST 3, 2005 THIS LEASE, made this 3 day of August , 2005, by and between MIE Properties, Inc. (herein called "Landlord") and View Systems, Inc., (herein called "Tenant"). WITNESSETH, that in consideration of the rental hereinafter agreed upon and the performance of all the conditions and covenants hereinafter set forth on the part of Tenant to be performed, Landlord does hereby lease unto said Tenant, and the latter does lease from the former an agreed upon 3,600 square feet at the following premises: 1550 Caton Center Drive, Suites D and E, Baltimore, Maryland 21227, (herein called the "Premises") for the term of three (3) years, beginning on the first (1st) day of October, 2005*, and ending on the thirtieth (30th) day of September, 2008, for the annual rental of $34,464.00, (herein called "Annual Rent"), subject to Annual Rent increases, payable in advance on the first day of each and every month during the term of this Lease in equal monthly installments of $2,872.00. Said installments of Annual Rent shall be paid to MIE Properties, Inc., 5720 Executive Drive, Baltimore, Maryland 21228-1757 or at such other place or to such appointee of Landlord as Landlord may from time to time designate in writing. TENANT COVENANTS AND AGREES WITH LANDLORD AS FOLLOWS: 1. Tenant shall pay said rent and each installment of Annual Rent thereof as and when due without setoff or deduction. RENTAL ESCALATION 2. Beginning with the first anniversary of the commencement date of the lease term and each annual anniversary thereafter throughout the remainder of the Lease and renewal term(s), if any, the Annual Rent shall be increased by an amount equal to three percent (3%) of the previous year's rent, which sum shall be payable in equal monthly installments in advance as hereinafter set forth. USE 3. Tenant shall use and occupy the Premises solely for the following purposes: storage and distribution of metal detectors. ADDITIONAL RENT 4. All sums of money other than Annual Rent required to be paid by Tenant to Landlord pursuant to the terms of this Lease, unless otherwise specified herein, shall be considered additional rent and shall be collectible by Landlord as additional rent (herein called "Additional Rent"), in accordance with the terms of this Lease, including but not limited to: a. UTILITIES Tenant shall apply for and pay all costs of electricity, gas, telephone and other utilities used or consumed on the Premises, together with all taxes, levies or other charges on such utilities. . Tenant shall occupy the premises within two weeks of lease execution, with no rent obligation until October 1, 2005. 2 Tenant agrees to pay, as Additional Rent, Tenant's Pro Rata Share, as the same is defined in subsection c) herein, of the water and sewer service charges, or when applicable, the cost of maintaining and operating the well water and/or septic system chargeable to the total building in which the Premises are located. However, if in Landlord's reasonable judgment the water and sewer charges for the Premises are substantially higher than normal due to Tenant's water usage, then Tenant agrees to install a water meter upon Landlord's written request and thereafter pay all water charges for the Premises based on such meter reading. b. TAXES Tenant shall pay to Landlord, as Additional Rent, Tenant's Pro Rata Share (as defined herein) of taxes in excess of those assessed against the building or group of buildings in which the Premises is situated, together with all parking and other common areas adjacent thereto (collectively the "Property") during the fiscal year commencing July 1, 2005, and ending June 30, 2006, whether the taxes are payable to the State of Maryland and/or Baltimore County. If this Lease shall be in effect for less than a full fiscal year, Tenant's Pro Rata Share of the increased taxes shall be pro rated based upon the number of months that this Lease is in effect. Said taxes shall include Metropolitan District Charges, sewer service charges, and any and all benefits or assessments which may be levied on the Premises hereby leased but shall not include the United States Income Tax, or any State or other income tax upon the income or rent payable hereunder. c. COMMON AREA Tenant shall pay to Landlord as Additional Rent, Tenant's Pro Rata Share of the following Common Area Expenses: . Snow Removal . Grounds Maintenance . Common Area Electric (when applicable) . Fire Sprinkler Monitoring (when applicable) . Security (when Landlord, in its reasonable judgment deems necessary). . Trash Removal (when supplied by Landlord, Tenant will pay its Pro Rata Share of its usage). "Tenant's Pro Rata Share" shall mean the same percentage that the gross square foot area of Tenant's Premises bears to the gross square foot area of all leasable floor area within the Property. Landlord shall notify Tenant of any change in "Tenant's Pro Rata Share". Tenant's Pro Rata Share is equal to one and fifteen hundredths percent (1.15%). Landlord shall notify Tenant from time to time of the amounts which Landlord estimates will be payable by Tenant for Tenant's Pro Rata Share of utilities, taxes and common area expenses and Tenant shall pay such amounts to Landlord in equal monthly installments in advance on or before the first day of each month. Within a reasonable period of time following the end of each calendar year, or fiscal year (with regard to taxes) Landlord shall submit to Tenant a statement summarizing Landlord's costs for the utilities, taxes and common area expenses to be paid by Tenant with respect to such year, the amount paid by Tenant, and the amount of the resulting balance due or overpayment. Each such statement shall be final and conclusive if no objection is raised within ninety (90) days after submission of each such statement. Notwithstanding the forgoing provisions of the above paragraph, Landlord shall have the right to require Tenant to pay in arrears Tenant's Pro Rata Share of utilities, taxes and common area expenses in quarterly or semi-annual payments rather than on a monthly basis as provided above. MUNICIPAL REGULATING 7. Tenant shall observe, comply with and execute at its expense, all laws, orders, rules, requirements, and regulations of the United States, State, City or County of the said State, in which the Premises are located, and of any and all governmental authorities or agencies and of any board of fire underwriters or other similar organization, respecting the Premises and the manner in which the Premises are or should be used by Tenant. ASSIGNMENT AND SUBLET 8. Tenant shall not assign this Lease, in whole or in part, or sublet the Premises, or any part or portion thereof, or grant any license or concession for any part of the Premises, without the prior written consent of Landlord, said consent shall not be unreasonably withheld, conditioned or delayed. If such assignment or subletting is permitted, Tenant shall not be relieved from any liability whatsoever under this Lease. Landlord shall be entitled to all additional considerations over and above those stated in this Lease, which are obtained in or for the sublease and/or assignment. No option rights can be assigned or transferred by Tenant to an assignee or subtenant. Any sublet or assignment of this Lease will be assessed with processing fees to be paid for by Tenant as Additional Rent. Such fees shall not exceed $500.00. INSURANCE 9. Tenant shall do nothing in or about the Premises that will contravene or affect any policies of insurance against loss to Landlord's Real Property or against Landlord's public liability exposures which may now exist or which may exist during the term of this Lease or any extension thereof, or that will prevent Landlord from procuring such policies in companies acceptable to 4 Landlord. Tenant further agrees to pay, as Additional Rent, any increase in the premium of any insurance carried by Landlord caused by Tenant's occupancy, the nature of its business, any alterations or installation made by Tenant, or otherwise resulting from any act of Tenant, its agents, employees or customers. Tenant covenants and agrees that, from and after the earlier of the commencement of this Lease or the date of delivery of the Premises from Landlord to Tenant, Tenant will carry and maintain at its sole cost and expense and in the amounts specified, a commercial general liability insurance policy covering the Premises and Tenant's use thereof against claims for bodily injury or death and property damage occurring upon, in or about the Premises, such insurance to afford protection to the limit of not less than Two Million Dollars ($2,000,000) arising out of any one occurrence. The insurance coverage required under this Section 7 shall, in addition, extend to any liability of Tenant arising out of Tenant's indemnities hereinafter provided, as well as independent contractor's liability and contractual liability. If such insurance contains an annual aggregate limit, the annual aggregate limit may not be diminished by claims occurring at locations other than the Premises. All policies of insurance to be provided by Tenant shall be issued in a form acceptable to Landlord by insurance companies with general policyholder's rating of not less than A-XI as rated in the most current available "Best's Insurance Reports," and qualified to do business in the state in which the Premises are located. Executed copies of each such policy of insurance or certificate thereof shall be delivered to Landlord within ten (10) days after the earlier of the commencement of this Lease or delivery of possession of the Premises to Tenant and thereafter at least fifteen (15) days prior to the expiration of each such policy. As often as any such policy shall expire or terminate, renewal or additional policies shall be procured and maintained by Tenant in like manner and to like extent. All such policies of insurance shall contain a provision that the company writing said policy will give to Landlord at least thirty (30) days' notice in writing in advance of any cancellations, or lapse, or the effective date of any reduction in the amounts of insurance. In the event Tenant shall fail to promptly furnish any insurance herein required, Landlord may affect the same and Tenant shall promptly reimburse Landlord upon demand as Additional Rent, the premium so paid by Landlord. Such commercial general liability policy shall contain a provision that Landlord shall nevertheless be entitled to recover under said policies for any loss occasioned to it, its servants, agents and employees by reason of the negligence of Tenant or any other named insured. Any insurance provided for may be affected by a policy or policies of blanket insurance, covering additional items or locations; provided, however, that (i) Landlord shall be named as an additional insured thereunder as its interests may appear; (ii) the coverage afforded Landlord will not be reduced or diminished by reason of the use of such blanket policy of insurance. Any insurance policies herein required to be procured by Tenant shall contain an express waiver of any right of subrogation by the insurance company against the Landlord, and all other tenants or occupants of space in the building. 5 ALTERATIONS 10. a. Tenant shall make no alterations in addition to original improvements existing in the Premises at the time of occupancy without the prior written consent of Landlord, which consent will not be unreasonably withheld, conditioned or delayed. b. If Tenant shall desire to make any such alterations, plans for the same shall first be submitted to Landlord for approval, and upon approval, the same shall be performed by Tenant at its own expense. Tenant agrees that all such work shall be done in a good and workmanlike manner, that the structural integrity of the building shall not be impaired, that no liens shall attach to the building by reason thereof, and that all alterations shall be in accordance with all applicable codes. Tenant agrees to obtain at Tenant's expense all permits pertaining to the alterations. Tenant also agrees to obtain, prior to commencing to make such alterations, and to keep in full force and effect at all time while such alterations are being made, all at Tenant's sole cost and expense, such policies of insurance pertaining to such alterations and/or to the making thereof as Landlord reasonably may request or require Tenant to obtain, including, but not limited to, public liability and property damage insurance, and to furnish Landlord evidence satisfactory to Landlord of the existence of such insurance prior to Tenant's beginning to make such alterations. c. Any such alterations shall become the property of Landlord as soon as they are affixed to the Premises and all rights, title and interest therein of Tenant shall immediately cease, unless otherwise agreed to by Landlord in writing. Landlord shall have the sole right to collect any insurance for any damage of any kind caused by any alterations or improvements placed upon the Premises by Tenant. If the making of any such alterations, or the obtaining of any permits therefore shall directly or indirectly result in a franchise, minor privilege or any other tax or increase in tax, assessment or increase in assessment, such franchise, privilege, tax or assessment shall be paid, immediately upon its levy and subsequent levy, by Tenant. d. Unless Landlord shall consent in writing that all or part of any alterations installed by Tenant shall remain, the Premises shall be restored to their original condition by Tenant, at its own expense, before the expiration of its tenancy. 6 e. Costs of alterations or modifications (in addition to the improvements as described herein in Section 34) Tenant requests Landlord to make on Tenant's behalf during the term of this Lease shall be due and payable as Additional Rent. MAINTENANCE 6. a. Tenant shall, during the term of this Lease, keep the Premises and appurtenances (including, but not limited to, interior and exterior windows, interior and exterior doors, interior plumbing, heating, ventilating and air conditioning (HVAC), interior electrical or replacement works thereof) in good order and condition and will make all necessary repairs or replacement thereof. Landlord does, however, give a ninety (90) day warranty on all of the above mentioned items. This warranty does not include the required annual maintenance contract on the HVAC unit(s) as described below. Any repair made by Landlord at Tenant's request to Tenant's Premises shall be invoiced to Tenant and shall become due and payable as Additional Rent. Tenant will be responsible for all exterminating services, except termites, required in the Premises. If Tenant does not make necessary repairs within fifteen (15) days after receiving written notice from Landlord of the need to make a repair, Landlord may proceed to make said repair and the cost of said repair will become part of and in addition to the next due monthly rental. b. Tenant agrees to furnish to Landlord, at the expense of Tenant, prior to occupancy, a copy of an executed and paid for annual maintenance contract on all heating and air conditioning (HVAC) equipment with a reputable company acceptable to Landlord and said contract will be kept in effect during the term of the Lease at the expense of Tenant. Should Tenant not provide a satisfactory HVAC Maintenance contract to Landlord prior to occupancy, Tenant shall be provided a contract through MIE Properties, Inc. Billings for this contract shall become due and payable upon receipt of invoice and shall be considered Additional Rent. c. Landlord shall make all necessary structural repairs to the exterior masonry walls and roof of the Premises, after being notified in writing of the need for such repairs, provided the necessity for such repairs was not caused by the negligence or misuse of Tenant, its employees, agents or customers. d. Tenant shall, at the expiration of the term or at the sooner termination thereof by forfeiture otherwise, deliver up the Premises in the same good order and condition as they were at the beginning of the tenancy, reasonable wear and tear excepted. 7 DEFAULT 10. If Tenant shall fail to pay said rental or any other sum required by this Lease to be paid by Tenant and such failure shall continue for ten (10) days after written notice thereof to Tenant. In case Tenant shall fail to comply with any of the other provisions, covenants, or conditions of this Lease, on its part to be kept and performed, and such default shall continue for a period of thirty (30) days after written notice thereof shall have been given to Tenant by Landlord, and/or if Tenant shall fail to pay said rental or any other sum required by the terms of this Lease to be paid by Tenant, then, upon the happening of any such event, and in addition to any and all other remedies that may thereby accrue to Landlord, Landlord may do the following: a) Landlord's Election to Retake Possession Without Termination of Lease Landlord may retake possession of the Premises and shall have the right, but not the obligation, without being deemed to have accepted a surrender thereof, and without terminating this Lease, to relet the same for the remainder of the lease term upon terms and conditions satisfactory to Landlord; and if the rent received from such reletting does not at least equal the rent and other sums payable by Tenant hereunder, Tenant shall pay and satisfy the deficiency between the amount of rent and other sums so provided in this Lease and the rent received through reletting the Premises; and, in addition, Tenant shall pay reasonable expenses in connection with any such reletting, including, but not limited to, the cost of renovating, altering, and decorating for any occupancy, leasing commissions paid to any real estate broker or agent, and attorney's fees incurred. b) Landlord's Election to Terminate Lease -------------------------------------- Landlord may terminate the Lease and forthwith repossess the Premises and be entitled to recover as damages a sum of money equal to the total of the following amounts: 1) any unpaid rent or any other outstanding monetary obligation of Tenant to Landlord under the Lease; 2) the balance of the rent and other sums payable by Tenant for the remainder of the lease term to be determined as of the date of Landlord's re-entry; 3) damages for the wrongful withholding of the Premises by Tenant 4) all legal expenses, including attorney's fees, expert and witness fees, court costs and other costs incurred in exercising its rights under the Lease; 5) all costs incurred in recovering the Premises, restoring the Premises to good order and condition, and all commissions incurred by Landlord in reletting the Premises; and 6) any other reasonable amount necessary to compensate Landlord for all detriment caused by Tenant's default. 8 DAMAGE 11. In the case of the total destruction of the Premises by fire, other casualties, the elements or other cause, or of such damage thereto as shall render the same totally unfit for occupancy by Tenant for more than sixty (60) days, this Lease, upon surrender and delivery to Landlord of the Premises, together with the payment of the Annual Rent and Additional Rent to the date of such occurrence, shall terminate and be at an end. If the Premises are rendered partly untenantable by any cause mentioned in the preceding sentence, Landlord shall, at its own expense, restore the Premises with all reasonable diligence, and the Annual Rent and Additional Rent shall be abated proportionately for the period of said partial untenantability and until the Premises shall have been fully restored by Landlord. BANKRUPTCY 12. In the event of the appointment of a receiver or trustee for Tenant by any court, Federal and State, in any legal proceedings under any provisions of the Bankruptcy Act, if the appointment of such receiver or such trustee is not vacated within sixty (60) days, or if said Tenant be adjudicated bankrupt or insolvent, or shall make an assignment for the benefit of its creditors, then and in any of said events, Landlord may, at its option, terminate this tenancy by ten (10) days written notice, and re-enter upon the Premises. POSSESSION/BENEFICIAL OCCUPANCY 13. Landlord covenants and agrees that possession of the Premises shall be given to Tenant as soon as the Premises are ready for occupancy. If possession, cannot be given to Tenant on or before the commencement date of this Lease, Landlord agrees to abate the rent proportionately until possession is given to said Tenant and Tenant agrees to accept such prorated abatement as liquidated damages for the failure to obtain possession. If Tenant occupies any portion of the Premises prior to tender of possession thereof by Landlord, such occupancy shall be deemed to be beneficial occupancy and a proportionate share of the rent shall be due and payable as to that portion of the Premises so occupied, immediately upon Tenant's occupancy. Such occupancy by Tenant and rent thereby due shall not depend on official governmental approval of such occupancy, state of completion of building, availability or connection of utilities and services as but not limited to sewer, water, gas, oil, or electric. No rent credit shall be given because of lack of utilities or services unless caused by the negligence of Landlord. 9 SIGNS, ETC. 14. Tenant covenants and agrees that: a. It shall not place or permit any signs, lights, awnings or poles on or about the exterior of the Premises without the prior permission, in writing, from Landlord and at all times maintain its identification sign in good order and condition, property lit, if applicable and in conformity with all governmental requirements. b. Landlord, at Landlord's option, may immediately remove and dispose of any of the unauthorized aforementioned items at the expense of Tenant and said cost shall become part of and in addition to the next due monthly rental, as Additional Rent. Tenant further covenants and agrees that it will not paint or make any changes in or on the outside of the Premises without the written permission of Landlord. c. Tenant shall remove identification sign at the expiration or earlier termination of this Lease, install a blank panel immediately thereafter, and repair any damage caused by such removal. d. Landlord shall have the right to place a "For Rent" sign on any portion of the Premises for ninety (90) days prior to termination of this Lease and to place a "For Sale" sign thereon at any time. EXTERIOR OF PREMISES 15. Tenant further covenants and agrees not to put any items on the sidewalk or parking lot in the front, rear, or sides of said building or block said sidewalk, and not to do anything that directly or indirectly takes away any of the rights of ingress or egress of light from any other tenant of Landlord or do anything which will, in any way, change the uniform and general design of any property of Landlord of which the Premises hereby leased shall constitute a part. Tenant will also keep the steps to the Premises free and clear of ice, snow and debris. WATER DAMAGE 16. Tenant covenants and agrees that Landlord shall not be held responsible for and Landlord is hereby released and relieved from any liability by reason of or resulting from damage or injury to person or property of Tenant or of anyone else, directly or indirectly caused by (a) dampness or water in any part of the Premises or in any part of any other property of Landlord or of others and/or (b) any leak or break in any part of the Premises or in any part of any other property of Landlord or of others or in the pipes of the plumbing or heating works thereof, unless the damage is due to Landlord's negligence. 10 LIABILITY 17. Landlord shall not be liable to Tenant for any loss or injury to Tenant or to any other person or to the property of Tenant or of any other person unless such loss or damage shall be caused by or result from a negligent act or omission solely on the part of Landlord or any of its agents, servants, or employees. Tenant shall, and does hereby, indemnify and hold harmless Landlord and any other parties in interest from and against any and all liabilities, fines, claims, damages and actions, costs and expenses of any kind or nature (including attorneys' fees) and of anyone whatsoever (i) relating to or arising from the use and occupancy of the Premises; (ii) due to or arising out of any mechanic's lien filed against the building, or any part thereof, for labor performed or for materials furnished or claimed to be furnished to Tenant, or (iii) due to or arising out of any breach, violation or nonperformance of any covenant, condition or agreement in this Lease set forth and contained on the part of Tenant to be fulfilled, kept, observed or performed. RIGHT OF ENTRY 18. It is understood and agreed that Landlord, and its agents, servants, and employees, including any builder or contractor employed by Landlord, shall have, and Tenant hereby gives them and each of them, the absolute, and unconditional right, license and permission, at any and all reasonable times, and for any reasonable purpose whatsoever, to enter through, across or upon the Premises or any part thereof, and, at the option of Landlord, to make such reasonable repairs to or changes in the Premises as Landlord may deem necessary or proper. Tenant agrees Landlord and its agents and assigns have the unconditional right to show the Premises for lease at any time, without notice once Tenant notifies Landlord of its intention to vacate the Premises. EXPIRATION 19. It is agreed that the term of this Lease expires on September 30, 2008, without the necessity of any notice by or to any of the parties hereto. If Tenant shall occupy the Premises after such expiration, it is understood that, in the absence of any written agreement to the contrary, said Tenant shall hold the Premises as a "Tenant from month to month", subject to all the other terms and conditions of this Lease, at double the highest monthly installments of Annual Rent reserved in this Lease. If Tenant fails to surrender the Premises upon expiration of the lease term or sooner termination of this Lease; restore the Premises to the condition required by Paragraph 8d of this Lease by the expiration of the lease term or earlier termination of this Lease; or remove all items of property from the Premises by the expiration of the lease term or sooner termination of this Lease, then Landlord shall be entitled to all remedies available at law or under this Lease, including, but not limited to, the recovery of any consequential damages. 11 Prior to Lease expiration, Tenant agrees to schedule an inspection with Landlord to confirm that the Premises will be in proper order at expiration, including, but not limited to, lighting, mechanical, electrical and plumbing systems. CONDEMNATION 20. It is agreed that in the event condemnation proceedings are instituted against the Premises and possession taken by the condemning authority, then this Lease shall terminate at the date possession is taken and Tenant shall not be entitled to recover any part of the award. SUBORDINATION 21. It is agreed that Landlord shall have the right to place a mortgage or deed of trust on the Premises and this Lease shall be subordinate to any such mortgage or deed of trust whether presently existing or hereafter placed on the Premises, and Tenant agrees to execute any reasonable documents assisting the effectuating of said subordination. Furthermore, if any person or entity shall succeed to all or part of Landlord's interest in the Premises, whether by purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, Tenant shall automatically attorn to such successor in interest, which attornment shall be self operative and effective upon the signing of this Lease, and Tenant shall execute such other agreement in confirmation of such attornment as such successor in interest shall reasonably request. NOTICE 22. Any written notices required by this Lease shall be deemed sufficiently given, if hand delivered, or sent via first class U.S. mail or by overnight courier service. Any notice required by this Lease is to be sent to Landlord at: 5720 Executive Drive Baltimore, Maryland 21228-1757 Any notice required by this Lease is to be sent to Tenant at: ________________________________ ________________________________ Emergency Contact Information: Address:________________________ Contact:________________________ Title:__________________________ Telephone:______________________ Fax:_____________________________ 12 REMEDIES NOT EXCLUSIVE 23. No remedy conferred upon Landlord shall be considered exclusive of any other remedy, but shall be in addition to every other remedy available to Landlord under this Lease or as a matter of law. Every remedy available to Landlord may be exercised concurrently or from time to time, as often as the occasion may arise. Tenant hereby waives any and all rights which it may have to request a jury trial in any proceeding at law or in equity in any court of competent jurisdiction. NON-WAIVER 24. It is agreed that the failure of Landlord to insist in any one or more instances upon a strict performance of any covenant of this Lease or to exercise any right herein contained shall not be construed as a waiver or relinquishment for the future of such covenant or right, but the same shall remain in full force and effect, unless the contrary is expressed in writing by Landlord. The receipt of Annual Rent or Additional Rent by Landlord, with knowledge of any breach of this Lease by Tenant or of any default on the part of Tenant hereunder, shall not be deemed to be a waiver of any provisions of this Lease. Neither acceptance of the keys nor any other act or thing done by Landlord or any agent or employee of Landlord shall be deemed to be an acceptance of a surrender of the Premises, excepting only an agreement in writing by Landlord accepting or agreeing to accept such surrender. SECURITY DEPOSIT AND FINANCIAL STATEMENTS 25. A security deposit of $2,872.00 is required to accompany this Lease, when submitted for approval by Landlord, subject to all the conditions of the security deposit agreement attached. If this Lease is not approved by Landlord within thirty (30) days of its submission to Landlord, the security deposit will be refunded in full. Landlord shall have the right to require annual financial statements for Tenant and/or any Guarantor of this Lease. Tenant or Guarantor shall provide written answers to any questions from Landlord which are related to Tenant's financial statements or provide written projections on Tenant's business, if the financials are unacceptable to Landlord. FINAL AGREEMENT 26. This Lease contains the final and entire agreement between the parties hereto, and neither they nor their agents shall be bound by any terms, conditions or representations not herein written. 13 LEGAL EXPENSE 27. In the event, to enforce the terms of this Lease, either party files legal action against the other, and is successful in said action, the losing party agrees to pay all reasonable expenses to the prevailing party, including the attorneys' fee incident to said legal action. In the event that Landlord is successful in any legal action filed against Tenant, Landlord's expenses incident to said legal action shall be due as Additional Rent. LAND 28. It is agreed that the Premises is the building area occupied by Tenant and only the land under that area. RELOCATION 29. Landlord shall have the right at any time during the lease term, upon not less than thirty (30) days written notice to Tenant, to relocate Tenant to another location within the Property, provided: (a) the new location is reasonably similar to size, utility and appearance to the Premises hereby demised and (b) Landlord pays all reasonable moving costs incurred by Tenant in connection with such move. The parties shall, upon Landlord's request, execute an amendment to this Lease which will specify the change in Premises, but this Lease shall in no other respect be amended. ENVIRONMENTAL REQUIREMENTS 30. Tenant hereby covenants and agrees that if at any time it is determined that there are materials placed on the Premises by Tenant which, under any environmental requirements require special handling in collection, storage, treatment, or disposal, Tenant shall, within thirty (30) days after written notice thereof, take or cause to be taken, at its sole expense, such actions as may be necessary to comply with all environmental requirements. If Tenant shall fail to take such action, Landlord may make advances or payments towards performance or satisfaction of the same but shall be under no obligation to do so; and all sums so advanced or paid, including all sums advanced or paid in connection with any judicial or administrative investigation or proceeding relating thereto, including, without limitation, reasonable attorneys' fees, fines, or other penalty payments, shall be at once repayable by Tenant as Additional Rent and shall bear interest at the rate of four percent (4%) per annum above the Prime Rate from time to time as published by the Wall Street Journal, from the date the same shall become due and payable until the date paid. Failure of Tenant to comply with all environmental requirements shall constitute and be a default under this Lease. Tenant will remain totally liable hereunder regardless of any other provisions which may limit recourse. 14 SEVERABILITY 31. In case any one or more of the provisions contained in this Lease shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. LATE CHARGE 32. If Tenant shall fail to pay when due, the Annual Rent, Additional Rent or any other sum required by the terms of this Lease to be paid by Tenant, then, upon the happening of any such event, and in addition to any and all other remedies that may thereby accrue to Landlord, Tenant agrees to pay to Landlord a late charge of five percent (5%) of the monthly account balance. The late charge on the base rent accrues after ten (10) days of the due date and said late charges shall be collectible as Additional Rent. In the event Tenant's rent is received fifteen (15) days after due date, Landlord shall have option to require the rental payment be made with a certified or cashier's check. QUIET ENJOYMENT 33. Tenant, upon paying the minimum rent, Additional Rent and other charges herein provided and observing and keeping all of its covenants, agreements, and conditions in this Lease, shall quietly have and enjoy the Premises during the term of this Lease without hindrance or molestation by anyone claiming by or through Landlord: subject, however, to all exceptions, reservations and conditions of this Lease. LANDLORD'S WORK 34. The Premises shall contain only the following items at the expense of Landlord: a. Paint office area b. Install new carpet and cove base as selected from Landlord's sample book c. Install six foot base cabinet with counter-top and sink adjacent to existing restrooms WINDOW COVERINGS 35. Tenant shall not install any window covering other than a one-inch horizontal mini-blind of an off-white color unless approved in writing by Landlord. RULES AND REGULATIONS 36. Tenant shall at all times comply with the Rules and Regulations attached hereto. Landlord shall make a reasonable effort to enforce the Rules and Regulations equitably against all tenants of the Property. ESTOPPEL CERTIFICATE 37. Tenant shall, at any time during the term of this Lease or any renewal thereof, upon request of Landlord, execute, acknowledge, and deliver to Landlord or its designee, a statement in writing, certifying that this Lease is unmodified and in full force and effect if such is the fact that the same is in full force and effect. 15 EXCULPATION CLAUSE 38. Neither Landlord nor any principal, partner, member, officer, director, trustee or affiliate of Landlord (collectively, "Landlord Affiliates") shall have any personal liability under any provision of this Lease. OPTIONS 39. Provided Tenant is not then in default hereunder, Tenant may extend the term of this Lease and as it may be amended from time to time, for one (1) further successive period of three (3) years, by notifying Landlord in writing of its intention to do so at least one hundred twenty (120) days prior to the expiration of the then current term. The Annual Rent for each succeeding extension shall be adjusted as follows: 16 AS WITNESS THE HANDS AND SEALS OF THE PARTIES HERETO THE DAY AND YEAR FIRST ABOVE WRITTEN: WITNESS: TENANT: View Systems, Inc. /s/ Linda Than By: /s/ Gunther Than Printed Name: Gunther Than Title: CEO WITNESS: LANDLORD: MIE Properties, Inc. /s/ Linda Than By: /s/ Robert L. Becker Printed Name: Robert Becker Title: Vice President EX-31.1 3 viewex311.txt PRINCIPAL 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 issuer'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 10, 2005 ____________________________________ Gunther Than, Chief Executive Officer EX-31.2 4 viewex312.txt PRINCIPAL FINANCIAL OFFICER CERTIFICATIN 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 issuer'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 10, 2005 ________________________________________ Gunther Than, Principal Financial Officer EX-32.1 5 viewex321txt.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 The undersigned executive officer of View Systems, Inc. certifies (the "Company") 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, 2005, 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 10, 2005 /s/ Gunther Than ____________________________________ Gunther Than Chief Executive Officer Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----