The following analysis of our consolidated financial condition and results of operations for the years ended December 31, 2019 and 2018 should be read in conjunction with the Consolidated Financial Statements and other information presented elsewhere in this annual report.





OVERVIEW

We have decided to include in our sales efforts other products aside the concealed weapons detection system. Currently, customers can purchase extended warranties, which provide for replacement or repair of the unit beyond the period provided by the unconditional warranty. Warranties can be purchased for various periods but generally they are for a one year period that begins after any other warranties expire.

In the short term, management plans to self fund through personal investment of time and money. Then the next phase of our business plan will be to raise additional funds through common stock offerings to provide working capital to finance several acquisitions. In the past, when possible we have conserved our cash by paying employees, consultants, and independent contractors with our common stock. On June 1, 2010, by majority shareholder consent, we adopted our 2010 Service Provider Stock Compensation Plan. Reserved for equity issuances under the Service Provider Stock Compensation Plan are 50,000,000 shares of our common stock. On July 21, 2010, we registered the common stock issuable under the 2010 Equity Incentive Plan and the 2010 Service Provider Stock Compensation Plan. A total of 100,000,000 shares are reserved for issuances under the two plans.

Merger or Acquisitions in 2019

As of this date, there are no pending acquisitions at the time of this filing.

Although we have agreed in a Memorandum of Understanding that the investments made into Sannabis & New Columbia Resources give View Systems a First Right of Refusal to acquire both companies at an discounted value for the investment. Please find attachment of the MOU in this filing.





Manufacturing

We no longer manufacture the ViewScan (original) since we have licensed it to a company called IP-Video Corporation since we have determined a new and enhanced wider opening model is needed to continue in continue in the walk through portal security market. Until we patent the new enhanced unit we are quiescent in our manufacturing activities.





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RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED DECEMBER 31, 2019 AND DECEMBER 31, 2018

The following discussions are based on the consolidated financial statements of View Systems and its subsidiaries. These charts and discussions summarize our financial statements for the years ended December 31, 2019 and 2018 and should be read in conjunction with the financial statements, and notes thereto, included with this Annual Report.





                    SUMMARY COMPARISON OF OPERATING RESULTS



                                    Years ended December 31,
                                       2019             2018
Revenues, net                     $         1,400     $  32,502
Cost of sales                                   -             -
Gross profit (loss)                         1,400        32,502
Total operating expenses                  715,179        57,744

Loss from continuing operations (713,779 ) (25,242 ) Total other income (expense)

             (525,197 )     988,175
Net income (loss)                      (1,238,976 )     918,238
Net loss per share                $         (0.00 )   $   (0.00 )

The following chart provides a breakdown of our sales in 2019 and 2018.





                                        2019         2018
ViewScan                               $     -     $      -
Warranty                                     0       30,767

Service, installation, training, etc 1,400 1,735 Total

$ 1,400     $ 32,502

Our sales backlog at December 31, 2019 was $-0-.

Fiscal Year Ended December 31, 2019 Compared to Fiscal Year Ended December 31, 2018.

Our net loss for fiscal year ended December 31, 2019 was $(1,238,976) compared to a net income of $918,238 for fiscal year ended December 31, 2018.

We generated revenues of $1,400 during fiscal year ended December 31, 2019 compared to revenues of $32,502 during fiscal year ended December 31, 2018.

We have experienced a cessation of sales of our products as a result of giving an exclusive license to manufacture our previous version to a large distributer of security products.

We incurred an operating loss of ($713,779) during fiscal year ended December 31, 2019 as compared to an operating loss of ($25,242) in fiscal year ended in December 31, 2018. Our expenses increased primarily due to a significant increase in professional fees, salaries and benefits, professional fees and administrative driven by our investment in then afore mentioned entities with the intent of adding other revenue streams to our core business.

Thus, our net loss f of ($1,238,976) during fiscal year ended December 31, 2019 included a ($383,010) derivative, interest and loss on stock conversion expense. The net income during fiscal year ended December 31, 2018 was ($918,238) was primarily due to a gain on renegotiated debt of $1,272,123.

The weighted average number of shares outstanding was 390,579,210 for fiscal year ended December 31, 2019 compared to 326,705,526 for fiscal year ended December 31, 2018.

LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN

Fiscal Year Ended December 31, 2019

As of December 31, 2019, our current assets were $20,835 and our current liabilities were $1,594,693. As of December 31, 2019, current liabilities were comprised of: (i) $161,715 in accounts payable and accrued expenses; (ii) $492,115 in accrued and deferred compensation; (iii) $134,237 in accrued and withheld payroll taxes payable; (iv) $13,841 in accrued interest payable; (v) $-0- in accrued royalties payable; (vi) $266,512 in loans from stockholders; (vii) $142,421in notes payable; (viii) deferred revenue of $0 and (ix) derivative liability of $383,852;.





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The increase in total assets during fiscal year ended December 31, 2019 from fiscal year ended December 31, 2018 was primarily due to an investment in a related party.

As of December 31, 2019, our total liabilities were $1,594,693 comprised of current liabilities. The increase in liabilities during fiscal year ended December 31, 2019 from fiscal year ended December 31, 2018 was primarily due to the increase in convertible loans and accrued derivative liability.

Stockholders' deficit increased to ($1,573,858) for fiscal year ended December 31, 2019 from ($953,885) for fiscal year ended December 31, 2018.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities.

Cash Flows from Investing Activities

For fiscal year ended December 31, 2019, net cash flows used in investing activities was $0 compared to $0 for fiscal year ended December 31, 2018.

Cash Flows from Financing Activities

For the fiscal year ended December 31, 2019, net cash flows provided from financing activities was $210,427 compared to $93,000 for fiscal year ended December 31, 2018, which primarily consisted of proceeds from convertible notes.





PLAN OF OPERATION AND FUNDING

We have incurred losses from operations for the past three fiscal years and had a net operating loss of ($713,779) at fiscal year ended December 31, 2019. Our revenues from product sales have ceased and are not sufficient to cover all of our operating expenses. Our auditors have expressed substantial doubt that we can continue as a going concern. We are continuing to push acquiring other income streams.

Management intends to finance our 2020 operations primarily with loans and any cash short falls will be addressed through equity or debt financing, if available. Management expects revenues will continue to be non-existant in the short term but will increase in the long term as additional products are brought on-line moving forward. We will need to continue to raise additional capital, both internally and externally, to cover cash shortfalls and to compete in our markets. At our current revenue levels management believes we will require an additional $600,000 in equity financing during the next 12 months to satisfy our cash requirements of approximately $50,000 per month for operations and to facilitate our new business plans both in these bio-resource markets and the development of an advanced Detection Portal.

These operating costs include cost of sales, general and administrative expenses, salaries and benefits and professional fees related to contracting engineers. We have insufficient financing commitments in place to meet our expected cash requirements for 2020 and we cannot assure the company we will be able to obtain financing on favorable terms. If we cannot obtain financing to fund our operations in 2020, then we will be required to reduce our expenses and scale back our operations.





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Going Concern

The market price of our common stock has fallen below the fixed price of our registered stock offering, as in prior years we may again have insufficient financing commitments in place to meet our expected cash requirements for 2020. We cannot assure you that we will be able to obtain financing on favorable terms. If we cannot obtain financing to fund our operations in 2020, then we may be required to further reduce our expenses and scale back our operations. These factors raise substantial doubt of our ability to continue as a going concern. Footnote 2 to our financial statements provides additional explanation of Management's views on our status as a going concern. The audited financial statements contained in this Annual Report do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts of liabilities that may result should we be unable to continue as a going concern.

Our independent registered accounting firm included an explanatory paragraph in their reports on the accompanying financial statements for December 31, 2019 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

COMMITMENTS AND CONTINGENT LIABILITIES

We share an office at 7833 Walker Dr., Greenbelt, Maryland 20770. We rent on a quarter to quarter basis.

Our total current liabilities increased to ($1,594,693) in fiscal year ended December 31, 2019 compared to ($953,885) at fiscal year ended December 31, 2018. As of December 31, 2019, our short and long term notes payable consist of the following:

Stockholder

Demand loan payable with interest at 5% per month dated September 18, 2009. The loan is secured by the Company's accounts receivable. The note was payable in full on December 17, 2009 and is currently in default. 50,000 50,000



Convertible promissory note with interest at 12% per
year dated January 24, 2018, convertible into the
Company's common stock 50% discount to the lowest
trading price during the 25 trading days immediately
preceding conversion. The note was due October 24,
2018 and is currently in default                              16,831          53,000

Convertible promissory note with interest at 12% per
year dated July 2, 2018, convertible into the
Company's common stock 50% discount to the lowest
trading price during the 25 trading days immediately
preceding conversion. The note was due July 2, 2019
and is currently in default                                   40,000          40,000

Convertible promissory note with interest at 12% per
year dated August 19, 2019, convertible into the
Company's common stock 58% discount to the lowest
trading price during the 25 trading days immediately
preceding conversion. The note is due August 19, 2020         38,000               -

Convertible promissory note with interest at 12% per
year dated October 8, 2019, convertible into the
Company's common stock 50% discount to the lowest
trading price during the 25 trading days immediately
preceding conversion. The note is due October 20, 2020        50,000               -

Convertible promissory note with interest at 12% per
year dated October 22, 2019, convertible into the
Company's common stock 50% discount to the lowest
trading price during the 25 trading days immediately
preceding conversion. The note is due October 22, 2020        53,000               -

OFF BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.





CONTRACTUAL OBLIGATIONS

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





CRITICAL ACCOUNTING POLICIES

We have one main products, namely the concealed weapons detection system. In all cases revenue is considered earned when the product is shipped to the customer, installed (if necessary) and accepted by the customer as a completed sale. Each product has an unconditional 30 day warranty, during which time the product can be returned for a complete refund. Customers can purchase extended warranties, which provide for replacement or repair of the unit beyond the period provided by the unconditional warranty. Warranties can be purchased for various periods but generally they are for one year period that begins after any other warranties expire. The revenue from warranties is recognized on a straight line bases over the period covered by the warranty. Prior to the issuance of financial statements management reviews any returns subsequent to the end of the accounting period which are from sales recognized during the accounting period, and makes appropriate adjustments as necessary. Product prices are fixed or determinable and products are only shipped when collectability is reasonably assured.





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Stock Based Compensation

We account for share-based compensation at fair value. Stock based compensation cost for stock options granted to employees, board members and service providers is determined at the grant date using an option pricing model. The value of the award that is ultimately expected to vest is recognized as expensed on a straight-line basis over the requisite service period.

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