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14. RESTATEMENT

6 Months Ended

Jun. 30, 2011

Due to accounting errors, the Company has restated its financial statements as of and for the period ended June 30, 2011 to reflect a correction to an understatement of deferred income that results from allocating the revenue received under extended warranty arrangements over the life of the warranty. Also, in the original filing revenue was overstated due to recognition of sales prior to the installation of the products. As a result of reducing sales revenue there was a corresponding reduction in cost of sales and accounts payable. In addition, the Company is restating the December 31, 2010 financial statements due to the reclassification of common stock that was issued to a holder of a note payable. The Company had originally recorded the issuance of the stock as a payment in full for the note and related costs. However, after a further review of the legal documents, it was determined that the debt was not satisfied. Instead, the ultimate resolution of the debt was contingent on events that were still unfolding. The Company’s summarized financial statement elements comparing the restated financial statement elements to those originally filed are as follows:

VIEW SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

COMPARISON OF FINANCIAL STATEMENTS ELEMENTS AT JUNE 30, 2011

	Original			Restated			Change

Consolidated Balance Sheet:

Accounts receivable	$	53,692		$	39,360		$	(14,332	)

Total assets	$	1,091,965		$	1,077,633		$	(14,332	)

Accounts payable	$	440,231		$	394,260		$	(45,971	)
Stock settlement payable		-			163,366			163,366

Deferred income		-			198,923			198,923

Current liabilities		1,413,221			1,729,467			316,246

Total liabilities		1,437,659			1,753,905			316,246

Stock settlement in process		-			163,366			163,366

Accumulated deficit
Beginning of period		(22,837,787	)		(22,953,904	)		(116,117	)
End of period		(23,189,151	)		(23,356,363	)		(167,212	)

Total stockholders’ deficit	$	( 345,694	)	$	(676,272	)	$	(330,578	)

Consolidated Statement of Operations:

Revenue	$	191,296		$	93,832		$	(97,464	)

Cost of sales		58,339			10,854			(47,485	)

Gross profit		132,957			82,978			(49,979	)

Operating expenses		419,575			420,691			1,116

Net loss	$	(351,364	)	$	(402,459	)	$	(51,095	)

- Definition

Tabular disclosure of the nature and effects of a restatement to correct an error in the reported results of operations of prior periods. When prior period adjustments are recorded, the resulting effects (both gross and net of applicable income tax) on the net income of prior periods are disclosed in the annual report for the year in which the adjustments are made, and amended filings of previously issued reports are typically issued.

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