##### Table of Contents



VIEW SYSTEMS INC.

FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended June 31, 2002



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VIEW SYSTEMS INC.
(Exact name of registrant as specified in its charter)

State or Other Jurisdiction of Incorporation or Organization: Florida

I.R.S. Employer identification No.: 59-2928366

7717 West 6th Avenue,
Suite A&B, Lakewood, CO 80205
(303) 237-8439

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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  [   ]

State the number of shares outstanding of each of the Registrants classes of
common stock, as of the latest practicable date.

|                      |  |                  
|--------------------- |  | -----------------
|                      |  | Outstanding at   
|Class of Common Stock |  | June 30, 2002    
|                      |  |                  
|$.001 par value       |  | 27,893,031 shares

See Accompanying Notes





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TABLE OF CONTENTS



|                              |                                                                                               |                                                |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONSOLIDATED BALANCE SHEETS                   
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS         
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS         
|                              |                                                                                               | CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
|                              |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II. OTHER INFORMATION   
|                              | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                              | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                            
|                              | ITEM 3. DEFAULTS UPON SENIOR SECURITIES:                                                     
|                              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                              | ITEM 5. OTHER INFORMATION                                                                    
|                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:                                                    
|SIGNATURES                   
|Exhibit 99.1                 
|Exhibit 99.2                 



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##### Table of Contents



VIEW SYSTEMS, INC.

FORM 10-QSB
Securities and Exchange Commission
Washington, D.C. 20549

VIEW SYSTEMS, INC.



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Index

|                                |  |                                                     |  |                                               
|------------------------------- |  | --------------------------------------------------- |  | ----------------------------------------------
|PART I.  FINANCIAL INFORMATION
|                               
|                               
|                               
|                               
|Item 1.                         |  | Financial Statements                               
|                               
|                               
|                               
|                               
|                                |  |                                                     |  | Consolidated Balance Sheet                    
|                               
|                               
|                               
|                               
|                                |  |                                                     |  | Statement of Cash Flows                       
|                               
|                               
|                               
|                               
|                                |  |                                                     |  | Consolidated Statement of Operations          
|                               
|                               
|                               
|                               
|                                |  |                                                     |  | Consolidated Statement of Stockholders Equity
|                               
|                               
|                               
|                               
|                                |  |                                                     |  | Notes to Consolidated Financial Statements    
|                               
|                               
|                               
|                               
|Item 2.                         |  | Management Discussion and Analysis                 
|                               
|PART II.  OTHER INFORMATION    
|                               
|                               
|                               
|                               
|Item 1.                         |  | Legal Proceedings                                  
|                               
|                               
|                               
|                               
|Item 2.                         |  | Changes in Securities and Use of Proceeds          
|                               
|                               
|                               
|                               
|Item 3.                         |  | Defaults Upon Senior Securities                    
|                               
|                               
|                               
|                               
|Item 4.                         |  | Submission of Matters to a Vote of Security Holders
|                               
|                               
|                               
|                               
|Item 5.                         |  | Other Information                                  
|                               
|                               
|                               
|                               
|Item 6.                         |  | Exhibits and Reports on Form 8-K                   
|                               
|                               
|                               
|                               
|SIGNATURES                     





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##### Table of Contents



VIEW SYSTEMS, INC.




PART I.   FINANCIAL INFORMATION




ITEM 1.   FINANCIAL STATEMENTS

VIEW SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET




CONSOLIDATED BALANCE SHEETS

ASSETS

|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |         |           |           | 
|----------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | -------------------- | --------- | ----------- | --------- | ------------ | ------- | --------- | --------- | 
|                        |                                                                                                                                                 |                                     |                      |           | June 30,    |           | December 31,
|                        |                                                                                                                                                 |                                     |                      |           | 2002        |           | 2001        
|                        |                                                                                                                                                 |                                     |                      |           |             |           |             
|                        |                                                                                                                                                 |                                     |                      |           | (Unaudited) |           |              |         |          
|                       
|                       
|                       
|                       
|CURRENT ASSETS:         |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|                        | Cash                                                                                                                                            |                                     | $                    | 28,764    |             |           | $            | 73,344  |          
|                        | Accounts receivable (Net of allowance for uncollectible
accounts of $513,958 and $279,149 at June 30, 2002 and
December 31, 2001 respectively.) |                                     |                      | 732,561   |             |           |              | 938,230 |          
|                        | Inventory                                                                                                                                       |                                     |                      | 475,651   |             |           |              | 55,644  |          
|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|                        |                                                                                                                                                 |                                     | Total current assets |           |             | 1,236,976 |              |         |           | 1,067,218 | 
|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|PROPERTY AND EQUIPMENT: |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|                        | Equipment                                                                                                                                       |                                     |                      | 341,554   |             |           |              | 332,967 |          
|                        | Leasehold improvement                                                                                                                           |                                     |                      | 18,683    |             |           |              | 3,000   |          
|                        | Software tools                                                                                                                                  |                                     |                      | 34,571    |             |           |              | 34,571  |          
|                        | Vehicles                                                                                                                                        |                                     |                      | 46,832    |             |           |              | 46,832  |          
|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|                        |                                                                                                                                                 |                                     | 441,640              |           |             |           | 417,370      |        
|                        | Less accumulated depreciation                                                                                                                   |                                     |                      | 171,744   |             |           |              | 138,307 |          
|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|                        |                                                                                                                                                 | Net value of property and equipment |                      |           | 269,896     |           |              |         | 279,063   |          
|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|OTHER ASSETS:           |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|                        | Goodwill
and other intangible assets                                                                                                            |                                     |                      | 2,377,595 |             |           |              | 781,248 |          
|                        | Investments                                                                                                                                     |                                     |                      |          |             |           |              | 275,000 |          
|                        | Due from affiliated entities                                                                                                                    |                                     |                      | 126,146   |             |           |              | 105,552 |          
|                        | Due from officers                                                                                                                               |                                     |                      |          |             |           |              | 88,099  |          
|                        | Deposits                                                                                                                                        |                                     |                      | 2,532     |             |           |              | 2,532   |          
|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|                        |                                                                                                                                                 | Total other assets                  |                      |           | 2,506,273   |           |              |         | 1,252,431 |          
|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |        
|                        |                                                                                                                                                 | TOTAL ASSETS                        |                      | $         | 4,013,145   |           |              | $       | 2,598,712 |          
|                        |                                                                                                                                                 |                                     |                      |           |             |           |              |        





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##### Table of Contents



VIEW SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS EQUITY

|                      |                                 |                                          |                                            |                            |        |             |           |              |        |           |           | 
|--------------------- | ------------------------------- | ---------------------------------------- | ------------------------------------------ | -------------------------- | ------ | ----------- | --------- | ------------ | ------ | --------- | --------- | 
|                      |                                 |                                          |                                            |                            |        | June 30,    |           | December 31,
|                      |                                 |                                          |                                            |                            |        | 2002        |           | 2001        
|                      |                                 |                                          |                                            |                            |        |             |           |             
|                      |                                 |                                          |                                            |                            |        | (Unaudited) |           |              |        |          
|                     
|                     
|                     
|                     
|CURRENT LIABILITIES:  |                                 |                                          |                                            |                            |        |             |           |             
|                      | Accounts payable                |                                          | $                                          | 327,713                    |        |             | $         | 345,657      |       
|                      | Note payable                    |                                          |                                            | 34,374                     |        |             |           | 6,052        |       
|                      | Accrued interest                |                                          |                                            | 67,343                     |        |             |           | 33,000       |       
|                      | Notes payable                   |                                          |                                            | 110,000                    |        |             |           | 110,000      |       
|                      | Due to shareholders             |                                          |                                            | 452,683                    |        |             |           |             |       
|                      |                                 |                                          |                                            |                            |        |             |           |             
|                      |                                 |                                          | Total current liabilities                  |                            |        | 992,113     |           |              |        | 494,709   |          
|                      |                                 |                                          |                                            |                            |        |             |           |             
|LONG-TERM DEBT:       |                                 |                                          |                                            |                            |        |             |           |             
|                      | Notes payable                   |                                          |                                            | 159,625                    |        |             |           |             |       
|                      |                                 |                                          |                                            |                            |        |             |           |             
|                      |                                 |                                          |                                            | Total liabilities          |        |             | 1,151,738 |              |        |           | 494,709   | 
|                      |                                 |                                          |                                            |                            |        |             |           |             
|STOCKHOLDERS EQUITY: |                                 |                                          |                                            |                            |        |             |           |             
|                      | Common
stock  par value $0.001 |                                          |                                            |                            |        |             |           |              |       
|                      |                                 | 50,000,000 shares authorized,            |                                            |                            |        |             |           |              |        |          
|                      |                                 | 27,893,031 shares issued and outstanding |                                            |                            | 27,893 |             |           |              |       |          
|                      |                                 | 20,193,031 shares issued and outstanding |                                            |                            |       |             |           |              | 20,193 |          
|                      | Additional paid-in capital      |                                          |                                            | 12,102,262                 |        |             |           | 10,119,024   |       
|                      | Accumulated deficit             |                                          |                                            | (9,268,748                 | )      |             |           | (8,035,214   | )     
|                      |                                 |                                          |                                            |                            |        |             |           |             
|                      |                                 |                                          |                                            | Total stockholders equity |        |             | 2,861,407 |              |        |           | 2,104,003 | 
|                      |                                 |                                          |                                            |                            |        |             |           |             
|                      |                                 |                                          | TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY |                            | $      | 4,013,145   |           |              | $      | 2,598,712 |          
|                      |                                 |                                          |                                            |                            |        |             |           |             

See Accompanying Notes





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##### Table of Contents



VIEW SYSTEMS, INC.




CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED

|                                           |                                                                                          |                                                     |                           |            |             |         |             |          |          |          |  
|------------------------------------------ | ---------------------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------- | ---------- | ----------- | ------- | ----------- | -------- | -------- | -------- | -
|                                           |                                                                                          |                                                     |                           |            | June 30,    |         | June 30,   
|                                           |                                                                                          |                                                     |                           |            | 2002        |         | 2001       
|                                           |                                                                                          |                                                     |                           |            |             |         |            
|                                           |                                                                                          |                                                     |                           |            | (Unaudited) |         | (Unaudited)
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                          |                                                     |                           |            |             |         |            
|CASH FLOWS FROM OPERATING ACTIVITIES:      |                                                                                          |                                                     |                           |            |             |         |             |         
|                                           | Net loss                                                                                 |                                                     | $                         | (1,233,534 | )           |         | $           | (678,768 | )       
|                                           | Adjustments to reconcile net loss to net cash
provided by operating activities:          |                                                     |                           |            |             |         |             |          |         
|                                           |                                                                                          | Depreciation and amortization                       |                           |            | 30,378      |         |             |          | 78,950   |         
|                                           |                                                                                          | Bad debt expense                                    |                           |            | 239,809     |         |             |          |         |         
|                                           |                                                                                          | Employee compensation paid with stock               |                           |            | 214,238     |         |             |          | 25,000   |         
|                                           |                                                                                          | Changes in operating assets and liabilities:        |                           |            |             |         |             |          |          |         
|                                           |                                                                                          |                                                     | Accounts receivable       |            |             | (1,008  | )           |          |          | (156,454 | )
|                                           |                                                                                          |                                                     | Inventory                 |            |             | (60,360 | )           |          |          | (148,672 | )
|                                           |                                                                                          |                                                     | Deposits and other assets |            |             |        |             |          |          | (2,500   | )
|                                           |                                                                                          |                                                     | Accounts payable          |            |             | (24,414 | )           |          |          | 410      |  
|                                           |                                                                                          |                                                     | Accrued interest          |            |             | 5,500   |             |          |          | 5,500    |  
|                                           |                                                                                          |                                                     | Other accrued liabilities |            |             |        |             |          |          | (30,461  | )
|                                           |                                                                                          |                                                     |                           |            |             |         |             |         
|                                           |                                                                                          | Net cash provided by (used in) operating activities |                           |            | (834,391    | )       |             |          | (906,995 | )       
|                                           |                                                                                          |                                                     |                           |            |             |         |             |         
|CASH FLOWS FROM INVESTING ACTIVITIES:      |                                                                                          |                                                     |                           |            |             |         |             |         
|                                           | Purchase of property and equipment                                                       |                                                     |                           | (21,023    | )           |         |             | (34,254  | )       
|                                           | Funds advanced to affiliated entities                                                    |                                                     |                           | (20,594    | )           |         |             |         |         
|                                           | Cash element in Milestone Acquisition                                                    |                                                     |                           | 52,448     |             |         |             |         |         
|                                           |                                                                                          |                                                     |                           |            |             |         |             |         
|                                           |                                                                                          | Net cash provided by (used in) investing activities |                           |            | 10,831      |         |             |          | (34,254  | )       
|                                           |                                                                                          |                                                     |                           |            |             |         |             |         
|CASH FLOWS FROM FINANCING ACTIVITIES:      |                                                                                          |                                                     |                           |            |             |         |             |         
|                                           | Funds advanced (to) from shareholders                                                    |                                                     |                           | 31,332     |             |         |             | (58,189  | )       
|                                           | Repayment of note payable  bank                                                         |                                                     |                           | (6,052     | )           |         |             | (25,000  | )       
|                                           | Proceeds from sales of stock                                                             |                                                     |                           | 753,700    |             |         |             | 850,000  |         
|                                           |                                                                                          |                                                     |                           |            |             |         |             |         
|                                           |                                                                                          | Net cash provided by financing activities           |                           |            | 778,980     |         |             |          | 766,811  |         
|                                           |                                                                                          |                                                     |                           |            |             |         |             |         
|NET DECREASE IN CASH                       |                                                                                          |                                                     | (44,580                   | )          |             |         | (174,438    | )       
|CASH AT BEGINNING OF PERIOD                |                                                                                          |                                                     | 73,344                    |            |             |         | 265,245     |         
|                                           |                                                                                          |                                                     |                           |            |             |         |             |         
|CASH AT END OF PERIOD                      |                                                                                          | $                                                   | 28,764                    |            |             | $       | 90,807      |         
|                                           |                                                                                          |                                                     |                           |            |             |         |             |         
|SIGNIFICANT NON-CASH INVESTING ACTIVITIES: |                                                                                          |                                                     |                           |            |             |         |             |         
|                                           | Common Stock issued in Exchange for net assets of
Milestone Technology, Inc. as follows: |                                                     |                           |            |             |         |             |          |         
|                                           | Accounts receivable                                                                      |                                                     |                           | 28,132     |             |         |             |          |         
|                                           | Inventory                                                                                |                                                     |                           | 359,647    |             |         |             |          |         
|                                           | Fixed assets                                                                             |                                                     |                           | 188        |             |         |             |          |         
|                                           | Patents                                                                                  |                                                     |                           | 1,323,867  |             |         |             |          |         
|                                           | Accounts payable                                                                         |                                                     |                           | (6,470     | )           |         |             |          |         
|                                           | Notes payable                                                                            |                                                     |                           | (703,449   | )           |         |             |          |         
|                                           | Accrued interest                                                                         |                                                     |                           | (28,843    | )           |         |             |          |         

See Accompanying Notes





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##### Table of Contents



VIEW SYSTEMS, INC.




CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |            |         |         | 
|------------------------ | ----------- | ---------------------------------------- | ------------------------ | ---------- | ------------------ | ------- | ---------------- | ---------- | -------- | ------- | ---------- | ---------- | ------- | --------- | -------- | ---------- | ------- | ------- | 
|                         |             |                                          |                          |            | Three Months Ended |         | Six Months Ended
|                         |             |                                          |                          |            |                    |         |                 
|                         |             |                                          |                          |            | June 30,           |         | June 30          |            | June 30, |         | June 30   
|                         |             |                                          |                          |            | 2002               |         | 2001             |            | 2002     |         | 2001      
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |           
|REVENUE:                 |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                         |             | Sales of security systems                |                          | $          | 71,512             |         |                  | $          | 90,780   |         |            | $          | 131,596 |           |          | $          | 32,489  |        
|                         |             | Sales of assembled electronic components |                          |            |                   |         |                  |            |         |         |            |            |        |           |          |            | 9,512   |        
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                         |             | Total sales                              |                          |            | 71,512             |         |                  |            | 90,780   |         |            |            | 131,596 |           |          |            | 442,001 |        
|                         |             | Cost of goods sold                       |                          |            | 39,338             |         |                  |            | 54,990   |         |            |            | 72,114  |           |          |            | 198,900 |        
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|GROSS PROFIT ON SALES    |             |                                          | 32,174                   |            |                    |         | 35,790           |            |          |         | 59,482     |            |         |           | 243,101  |           
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                        
|                        
|                        
|                        
|OPERATING EXPENSES:      |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                         |             | Advertising and promotion                |                          |            | 1,139              |         |                  |            | 549      |         |            |            | 9,110   |           |          |            | 1,126   |        
|                         |             | Amortization                             |                          |            |                   |         |                  |            | 28,284   |         |            |            |        |           |          |            | 56,568  |        
|                         |             | Bad Debts                                |                          |            | 234,809            |         |                  |            |         |         |            |            | 234,809 |           |          |            |        |        
|                         |             | Depreciation                             |                          |            | 15,189             |         |                  |            | 11,191   |         |            |            | 30,378  |           |          |            | 22,382  |        
|                         |             | Dues and subscriptions                   |                          |            |                   |         |                  |            | 1,190    |         |            |            |        |           |          |            | 1,910   |        
|                         |             | Insurance                                |                          |            | 7,146              |         |                  |            | 9,192    |         |            |            | 16,495  |           |          |            | 16,695  |        
|                         |             | Interest                                 |                          |            | 6,878              |         |                  |            | 2,842    |         |            |            | 11,654  |           |          |            | 8,598   |        
|                         |             | Investor relations                       |                          |            | 17,007             |         |                  |            | 17,966   |         |            |            | 51,829  |           |          |            | 51,050  |        
|                         |             | Miscellaneous expense                    |                          |            | 7,135              |         |                  |            | 2,112    |         |            |            | 9,935   |           |          |            | 9,492   |        
|                         |             | Office expenses                          |                          |            | 49,331             |         |                  |            | 37,180   |         |            |            | 95,540  |           |          |            | 63,457  |        
|                         |             | Professional fees                        |                          |            | 257,651            |         |                  |            | 113,243  |         |            |            | 321,191 |           |          |            | 227,574 |        
|                         |             | Rent                                     |                          |            | 15,213             |         |                  |            | 40,967   |         |            |            | 26,268  |           |          |            | 80,973  |        
|                         |             | Repairs and maintenance                  |                          |            | 1,758              |         |                  |            | 4,299    |         |            |            | 4,064   |           |          |            | 7,740   |        
|                         |             | Research and development                 |                          |            | 21,404             |         |                  |            |         |         |            |            | 74,886  |           |          |            |        |        
|                         |             | Salaries and benefits                    |                          |            | 123,581            |         |                  |            | 131,511  |         |            |            | 295,026 |           |          |            | 305,217 |        
|                         |             | Sales promotions                         |                          |            | 27,763             |         |                  |            | 6,986    |         |            |            | 70,257  |           |          |            | 24,105  |        
|                         |             | Taxes  other                            |                          |            | 20                 |         |                  |            | 2,221    |         |            |            | 2,150   |           |          |            | 9,151   |        
|                         |             | Travel                                   |                          |            | 12,332             |         |                  |            | 15,546   |         |            |            | 30,779  |           |          |            | 24,105  |        
|                         |             | Utilities                                |                          |            | 2,957              |         |                  |            | 6,539    |         |            |            | 8,645   |           |          |            | 11,726  |        
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                         |             |                                          | Total operating expenses |            |                    | 801,313 |                  |            |          | 431,818 |            |            |         | 1,293,016 |          |            |         | 921,869 | 
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|NET LOSS FOR THE PERIODS |             | $                                        | (769,139                 | )          |                    | $       | (396,028         | )          |          | $       | (1,233,534 | )          |         | $         | (678,768 | )         
|                        
|                        
|                        
|                        
|LOSS PER SHARE:          |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                         | Basic       |                                          | $                        | (0.03      | )                  |         | $                | (0.03      | )        |         | $          | (0.04      | )       |           | $        | (0.05      | )      
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                         | Diluted     |                                          | $                        | (0.03      | )                  |         | $                | (0.03      | )        |         | $          | (0.04      | )       |           | $        | (0.05      | )      
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                        
|                        
|                        
|                        
|WEIGHTED AVERAGE SHARES  |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           
|                         | Outstanding |                                          |                          | 26,501,289 |                    |         |                  | 14,491,289 |          |         |            | 27,166,289 |         |           |          | 14,897,539 |        
|                         |             |                                          |                          |            |                    |         |                  |            |          |         |            |            |         |           |          |           

See Accompanying Notes





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VIEW SYSTEMS, INC.




CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

|                                                                                |                                                                  |   |        |       |         |   |             |         |               |   |            |            |       |   |           |            |  
|------------------------------------------------------------------------------- | ---------------------------------------------------------------- | - | ------ | ----- | ------- | - | ----------- | ------- | ------------- | - | ---------- | ---------- | ----- | - | --------- | ---------- | -
|                                                                                |                                                                  |   |        |       |         |   | Additional  |         |               |   |            |            | Total
|                                                                                |                                                                  |   | Common |       | Paid-In |   | Accumulated |         | Stockholders'
|                                                                                |                                                                  |   | Stock  |       | Capital |   | Deficit     |         | Equity       
|                                                                                |                                                                  |   |        |       |         |   |             |         |              
|Balances at January 1, 2001                                                     |                                                                  | $ | 11,481 |       |         | $ | 7,364,502   |         |               | $ | (6,097,930 | )          |       | $ | 1,278,053 |           
|                                                                                | Sale of common stock                                             |   |        | 2,125 |         |   |             | 847,875 |               |   |            |            |       |   |           | 850,000    |  
|                                                                                | Issuance of common stock as compensation
to employees and others |   |        | 60    |         |   |             | 24,940  |               |   |            |            |       |   |           | 25,000     |  
|                                                                                | Net loss for the six months
ended June 30, 2001                  |   |        |       |         |   |             |         |               |   |            | (678,768   | )     |   |           | (678,768   | )
|                                                                                |                                                                  |   |        |       |         |   |             |         |               |   |            |            |       |   |           |           
|Balances at June 30, 2001 (Unaudited)                                           |                                                                  |   | 13,666 |       |         |   | 8,237,317   |         |               |   | (6,776,698 | )          |       |   | 1,474,285 |           
|                                                                                | Sale of common stock                                             |   |        | 3,375 |         |   |             | 911,625 |               |   |            |            |       |   |           | 915,000    |  
|                                                                                | Issuance of common stock as compensation
to employees and others |   |        | 2,652 |         |   |             | 695,582 |               |   |            |            |       |   |           | 698,234    |  
|Issuance of common stock in exchange for
interest in Milestone Technology, Inc. |                                                                  |   | 500    |       |         |   | 274,500     |         |               |   |            |            |       |   | 275,000   |           
|                                                                                | Net loss for the six months ended December 31, 2001              |   |        |       |         |   |             |         |               |   |            | (1,258,516 | )     |   |           | (1,258,516 | )
|                                                                                |                                                                  |   |        |       |         |   |             |         |               |   |            |            |       |   |           |           
|Balances at December 31, 2001                                                   |                                                                  |   | 20,193 |       |         |   | 10,119,024  |         |               |   | (8,035,214 | )          |       |   | 2,104,003 |           
|                                                                                | Sale of common stock                                             |   |        | 3,415 |         |   |             | 750,285 |               |   |            |            |       |   |           | 753,700    |  
|Issuance of common stock in exchange for
interest in Milestone Technology, Inc. |                                                                  |   | 3,300  |       |         |   | 1,019,700   |         |               |   |            |            |       |   | 1,023,000 |           
|                                                                                | Issuance of common stock as compensation
to employees and others |   |        | 985   |         |   |             | 213,253 |               |   |            |            |       |   |           | 214,238    |  
|                                                                                | Net loss for the six months
ended June 30, 2002                  |   |        |       |         |   |             |         |               |   |            | (1,233,534 | )     |   |           | (1,233,534 | )
|                                                                                |                                                                  |   |        |       |         |   |             |         |               |   |            |            |       |   |           |           
|Balances at June 30, 2002 (Unaudited)                                           |                                                                  | $ | 27,893 |       |         | $ | 12,102,262  |         |               | $ | (9,268,748 | )          |       | $ | 2,861,407 |           
|                                                                                |                                                                  |   |        |       |         |   |             |         |               |   |            |            |       |   |           |           

See Accompanying Notes





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VIEW SYSTEMS, INC.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2002


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

View Systems, Inc. (the Company) designs and develops computer software
and hardware used in conjunction with surveillance capabilities. The
technology utilizes the compression and decompression of digital inputs. In
March 2002, the Company acquired Milestone Technology, Inc. which has developed
a concealed weapons detection portal.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, Milestone Technology, Inc., Real View
Systems, Inc. (Real View), Xyros Systems, Inc. (Xyros) and Eastern Tech
Manufacturing, Inc. (ETMC). All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates

Management uses estimates and assumptions in preparing financial
statements in accordance with accounting principles generally accepted in the
United States of America. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
differ from the estimates that were used.

Revenue Recognition

The Company and its subsidiaries recognize revenue and the related cost of
goods sold upon shipment of the product.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined
by the last-in-first-out method (LIFO). The inventory at June 30, 2002
includes the costs associated with the development and production of the
weapons detection portals, which are the principal product of Milestone
Technology, Inc. The costs also include amounts spent to document the designs
of the systems.





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VIEW SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002

Property and Equipment

Property and equipment is recorded at cost and depreciated over their
estimated useful lives, using the straight-line and accelerated depreciation
methods. Upon sale or retirement, the cost and related accumulated
depreciation are eliminated from the respective accounts, and the resulting
gain or loss is included in the results of operations. The useful lives of
property and equipment for purposes or computing depreciation are as follows:

|               |  |          
|-------------- |  | ---------
|Equipment      |  | 5-7 years
|Software tools |  | 3 years  

Repairs and maintenance charges which do not increase the useful lives of
assets are charged to operations as incurred. Depreciation expense for the six
months ended June 30, 2002 and 2001 amounted to $930,378 and $22,382
respectively.

Impairment of Long-Lived Assets

Long-lived assets and identifiable intangibles (including goodwill) to be
held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount should be addressed.
Impairment is measured by comparing the carrying value to the estimated
undiscounted future cash flows expected to result from use of the assets and
their eventual disposition.

Income Taxes

Deferred income taxes are recorded under the asset and liability method
whereby deferred tax assets and liabilities are recognized for the future tax
consequences, measured by enacted tax rates, attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss carryforwards.
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period the rate change becomes effective.
Valuation allowances are recorded for deferred tax assets when it is more
likely than not that such deferred tax assets will not be realized.

Research and Development

Research and development costs are expensed as incurred. Equipment and
facilities acquired for research and development activities that have
alternative future uses are capitalized and charged to expense over the
estimated useful lives.





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VIEW SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE MONTHS ENDED JUNE 30, 2002

Advertising

Advertising costs are charged to operations as incurred. Advertising
costs for the six months ended June 30, 2002 and 2001 were $9,110, and $1,126
respectively.

Monetary Transactions

Nonmonetary transactions are accounted for in accordance with Accounting
Principles Board Opinion No. 29 Accounting for Nonmonetary Transactionswhich
requires the transfer or distribution of a nonmonetary asset or liability to be
based, generally, on the fair value of the asset or liability that is received
or surrendered, whichever is more clearly evident.

Financial Instruments

For most financial instruments, including cash, accounts receivable,
accounts payable and accruals, management believes that the carrying amount
approximates fair value, as the majority of these instruments are short-term in
nature.

Net Loss Per Common Share

Basic net loss per common share (Basic EPS) is computed by dividing net
loss available to common stockholders by the weighted average number of common
shares outstanding. Diluted net loss per common share (Diluted EPS) is
computed by dividing net loss available to common stockholders by the weighted
average number of common shares and dilutive potential common share equivalents
then outstanding. Potential common shares consist of shares issuable upon the
exercise of stock options and warrants. The calculation of the net loss per
share available to common stockholders for the six months ended June 30, 2002
does not include potential shares of common stock equivalents, as their impact
would be antidilutive.

Segment Reporting

The company has determined that it does not have any separately reportable
operating segments as of June 30, 2002.

2.  FINANCIAL CONDITION

Since its inception, the Company has incurred significant losses and as of
June 30, 2000 had an accumulated deficit of $9.3 million. The Company believes
that it will incur operating losses for the foreseeable future. There can be
no assurance that the Company will be able to generate sufficient revenues to
achieve or sustain profitability in the future. However, the Company believes
that its current cash and cash equivalents, along with sales revenue and
anticipated equity infusions, will be sufficient to sustain operations through
June 30, 2001.





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VIEW SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE MONTHS ENDED JUNE 30, 2002

3.  BUSINESS COMBINATION

The Company purchased 100% of the common stock of Milestone Technology,
Inc. effective March 25, 2002. The purchase was accomplished in two
transactions. The Company acquired 6% of Milestone in December 2001 in
exchange for 500,000 shares of the Companys common stock. In March 2002 the
Company acquired the remaining 94% of Milestone for 3,300,000 shares of the
Companys common stock. Based on the then market value of the Companys common
stick ($0.55 per share in December and $0.31 per share in March) the total cost
of the acquisition was $1,298,000.

Milestone Technology, Inc. is a developer of concealed weapons detections
systems. Its primary product is a walk-through detector that uses advanced
magnetic technology to accurately pinpoint the location, size and numbers of
concealed weapons. Prior to its acquisition, Milestone Technology, Inc. was
considered to be a development stage enterprise.

Summarized unaudited financial statements for Milestone Technology, Inc.
as of and for the year ended December 31, 2001 are as follows:

|                                     |                     |                                            |           |           |                           |  | 
|------------------------------------ | ------------------- | ------------------------------------------ | --------- | --------- | ------------------------- |  | 
|                                     |                     |                                            |           |           | Balance Sheet (Unaudited)
|                                     |                     |                                            |           |           | As of December 31, 2001  
|                                     |                     |                                            |           |           |                          
|Assets                              
|Current Assets                       |                     | $                                          | 399,232   |          
|Fixed Assets                         |                     |                                            | 3,810     |          
|Licenses and patents                 |                     |                                            | 1,000,000 |          
|                                     |                     |                                            |           |          
|                                     | Total assets        |                                            | $         | 1,403,042 |                          
|                                     |                     |                                            |           |          
|Liabilities and Stockholders Equity
|Notes payable-current                |                     | $                                          | 620,000   |          
|Other current liabilities            |                     |                                            | 183,000   |          
|Notes payable-long term              |                     |                                            | 184,000   |          
|                                     |                     |                                            |           |          
|                                     | Total liabilities   |                                            |           | 987,000   |                          
|                                     | Stockholders equity |                                            |           | 416,042   |                          
|                                     |                     |                                            |           |          
|                                     |                     | Total liabilities and stockholders Equity |           | $         | 1,403,042                 | 
|                                     |                     |                                            |           |          

|                                    |                     |                       |        |         |          |  
|----------------------------------- | ------------------- | --------------------- | ------ | ------- | -------- | -
|Statement of Operations (Unaudited)
|For the Year Ended December 31,2001
|                                   
|                                   
|                                   
|                                   
|Revenue                             |                     | $                     | 24,290 |        
|                                    |                     |                       |        |        
|Expenses                            |                     |                       |        |        
|                                    | Product Development |                       | $      | 328,318 |         
|                                    | Operating expenses  |                       | $      | 156,775 |         
|                                    |                     |                       |        |        
|                                    |                     | Total Expenses        |        | $       | 487,093  |  
|                                    |                     |                       |        |        
|                                    |                     | Net loss for the year |        | $       | (462,803 | )
|                                    |                     |                       |        |        





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VIEW SYSTEMS, INC.




ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read and reviewed in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of
Operations set forth in the Companys Annual Report on Form 10-QSB for the year
ended December 31, 2001. In addition to historical information, this Form
10-QSB contains forward-looking statements that involve risks and
uncertainties, such as statements of the Companys plans and expectations. The
Companys actual results could differ materially from managements
expectations.

Since start-up of operations in September 1998, and until the end of 2001
we have devoted most of our resources to the development, sale of digital video
surveillance products. We have generated limited revenues from these products
to date, but are rapidly expanding our distribution network. At the same time
we are working on locating new products to meet market demand and enhancing our
product line. We have had some success in capturing interest and limited
sales in overseas markets such as Europe.

In December of 2001 we entered into a joint venture with Milestone
Technology to enhance and further develop their Concealed Weapons Detection
portal. This relationship was precipitated by our ability to manufacture
electronic boards and the fact that we had skills in developing facial
recognition systems. In March of 2002, the relationship evolved into a
complete merger of the two companies. Milestone has no less than 8 patents and
licenses than become available to be integrated into sellable products. This
also resulted in a net increase in assets to over $4,000,000. We believe that
the combination of our products: Digital Video Monitoring Centers, advanced
biometric access control, such as facial recognition, and Concealed Weapons
Detection (CWD) will help us meet the new heightened awareness demands of
security due to the September 11th events.

We have restructured the company and refocused our efforts towards
marketing this CWD portal as an entrée and adding other capabilities such as
explosives detection capability to build a comprehensive entry control device..
This direction is requiring us to make changes in personnel. engineering and
staff that is experienced in doing business with the federal government, state
government and local jurisdictions. A new President and Chief Operating
Officer has been appointed and is taking control and redirecting our efforts.
We have melded the two companies, Milestone and View Systems, operations,
assets and distribution networks. Multitude functional changes have been made
to integrate efforts and reduce redundancy.

Revenues resulting from these changes will not be realized for several
quarters, although we believe that they will be significantly greater as a
result of this new direction. During the last three months we have opened a
new facility in Denver, CO and





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VIEW SYSTEMS, INC.

are opening a sales and service location in the Los Angeles area. The
need to support our resellers has increased in complexity due to the increased
complexity of our systems.

An advisory board has been formed and is being built that can increase
sales, revenue and expand our reach in the security market. Several
prestigious individuals have become advisors to our board. More are being
interviewed and it expected will join the Board of Directors and Advisory
Board.

Results of Operations

Three Months Ended June 30, 2002 Compared With the Three Months Ended June 30,
2001:

Revenue

For the six months ended June 30, 2002, revenues from sales of our
products decreased $300,893 or 70%, to $131,596 from $432,489 in the same
period last year. This is largely due to our shift in focus from purely digital
video storage recorders to the introduction of our award winning SecureScan
Concealed Weapons Detection system. The sales cycles in the new market we are
addressing are long and require the approval of highly bureaucratic decision
makers. In contrast, the price points and margins are many multiples larger.

Gross Profit

Gross profit on sales for the six months ended June 30, 2002 decreased
$183,619 or 76% to $59,482 compared with $243,101 in the same period last year.
Gross profit margin for the six months ended June 30, 2002 was 45% compared
with 55% in the same period last year. Because of low net sales we achieved in
the period ended June 30, 2002, for reasons explained in the previous paragraph
under Revenue, we do not believe gross profit margin comparisons are
meaningful at this state of our operations.

Operating Expenses

Operating expenses for the six months ended June 30, 2002, increased to
$1,293,016, compared with $921,869 for the comparable period in 2001. The
increase is principally due to increasing the allowance for bad debts by
$234,809, increased expenditures in R & D and increased professional fees.
Professional fees as of June 30, 2002 included $211,234 from the issuance of
common stock as compensation for services rendered in lieu of cash. The
increases have been necessary due to shifts in our product line to the
Concealed Weapons Detection units.

As a result of the foregoing, net loss was $(1,233,534) for the six months
ended June 30, 2002, compared to a net loss of $(776,315) for the six months
ended June 30, 2001.





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VIEW SYSTEMS, INC.

Costs of Products and Services Sold

The cost of products and services sold, was $72,114 for the six months
ended June 30, 2002 and represented 55% of revenue for the period, compared to
$198,900 for the six months ended June 30, 2001 which represents 45% of
revenues for that period. Because of our low sales volume during this period,
we do not consider the costs of goods sold in the same period last year to be a
good measure of our true costs of goods sold. As our product sales increase
and account for a larger percentage of our overall sales, we expect that our
costs of goods and services sold will decline and stabilize as a percentage of
total revenue. We are continually working on engineering changes in our
security products that we expect will lower component costs for these products.
We do not determine our inventory on a quarterly basis, instead we do it on an
annual basis. Therefore, our cost of goods sold calculations are based on
estimates of inventory used in products sold.

Research and Development Expense

We spent $74,686 on research and development for the six months ended June
30, 2002, as compared with $0 in the same period last year. We are working on
changing our production facilities to manufacture the CWD portal. The changes
in the production facility will allow our margins to double and possibly
triple. Currently we purchase the CWD portal for about 60% of our selling
price. Manufacturing ourselves will allow us to sell at about 3 times cost of
manufacturing.

Salaries and Benefits

We spent $295,026 on salaries and benefits for the six months ended June
30, 2002, as compared with $305,217 in the same period last year. We incurred
$70,257 on business development expenses for the six-month period ended June
30, 2002 as compared with $24,105 in the same period a year ago. We expect the
business development expense to increase sharply as we launch the new products
into the market.

Net Operating Loss

We incurred approximately $(1,233,534) of net operating loss carry
forwards for the six-month period ended June 30, 2002, which may be used to
offset taxable income and income taxes in future years.

The refocusing of our
sales and manufacturing to the Concealed Weapons Detection portal is
making comparisons for the three month period a year ago not
significant. It will most likely take another three months until we
get a steady revenue flow to be able to make valid comparisons.
Manufacturing, shipping and service is significantly different and
needs a longer time to compare.

Revenue

For the three months
ended March 31, 2002, revenues from sales of our products decreased
$19,268 or 22% to $71,512 from $90,780 in the same period last year.
The refocusing of our efforts to the Concealed Weapons Detection
Portals sales has resulted in low net sales for the period ended
June 30, 2002. The sales cycles for this product are significant
longer but also our revenue potential is much larger than digital
video revenue. The competition in digital video products is much
greater whereas the CWD portal is unique and patent protected.

Gross Profit

Gross profit on sales
for the three months ended June 30, 2002 decreased $3,616 or 10% to
$32,174 compared with $35,790 in the same period last year. Gross
profit margin for the three months ended June 30, 2002 was 45%
compared with 30% in the same period last year. We do not believe
gross profit margin comparisons are meaningful at this state of our
operations. We do anticipate higher gross margin percentages as our
new products are sold.

Operating Expenses

Operating expenses
for the three months ended June 30, 2002, increased to $801,313,
compared with $431,818 for the comparable period in 2001. The
increase is principally due to a shift of expenditures with increased
expenditures in research and development, professional fees and bad
debt expense.

As a result of the
foregoing, net loss was $(769,139) for the three months ended June
30, 2002, compared to a net loss of $(396,028) for the three months
ended June 30, 2001. Our expenses have increased significantly in
spite of decreased sales due to our shifting of direction to the CWD
sales.

Costs and Expenses:

Costs of Products
and Services Sold

The cost of products
and services sold, was $39,338 for the three months ended June 30,
2002 and represented 65% of revenue for the period, compared to
$59,990 for the three months ended June 30, 2001 which represents 61%
of revenues for that period. Because of our low sales volume during
this period, we do not consider the costs of goods sold in the same
period last year to be a good measure of our true costs of goods
sold. As our product sales increase and account for a larger
percentage of our overall sales, we expect that our costs of goods
and services sold will decline and stabilize as a percentage of total
revenue. We are continually working on engineering changes in our
security products that we expect will lower component costs for these
products. We do not determine our inventory on a quarterly basis,
instead we do it on an annual basis. Therefore, our cost of goods
sold calculations are based on estimates of inventory used in
products sold.

Research and
Development Expense

We spent $21,404 on
research and development for the three months ended June 30, 2002, as
compared with $0 in the same period last year. We are working on
introducing additional products, such as the CWD and Central Station
Monitoring to the market in 2002. We expect continued heavy
expenditures in this area, evidencing our commitment to develop
industry leading video management and identification products.

Bad Debt Expense

Bad debt expense
increased to $234,809 for the period as we continue to attempt to
collect receivables for 2001 sales made to an international customer.
We are currently in negotiation to collect the amounts but we believe
that amounts actually collected will not be the full sales amounts
and that the allowance established at this time will be sufficient.

Salaries and
Benefits

We spent $123,581 on
salaries and benefits for the three months ended June 30, 2002, as
compared with $131,511 in the same period last year. We incurred
$27,763 as business development expenses for the three month period
ended June 30, 2002 as compared with $6,986 in the same period a
year ago.

Net Operating Loss

We incurred
approximately $(750,000) of net operating loss carry forwards for the
three-month period ended June 30, 2002, which may be used to offset
taxable income and income taxes in future years.

Liquidity and Capital Resources

Since the start-up of our operations in 1998, we have funded our cash
requirements primarily through equity transactions. We received $10,946,435
since inception through the issuance of our common stock. We are not currently
generating cash from our operations in sufficient amounts to finance our
business and will continue to need to raise capital from other sources. We
used the proceeds from these sales of





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VIEW SYSTEMS, INC.

equity to fund operating activities, including, product development, sales
and marketing, and to invest in the acquisition of technology, assets and
business. As of June 30, 2002, we had total assets of $4,013,145, an increase
of $1,414,433 over last years $2,598,712 at December 31, 2001. Total
liabilities were $1,151,738, at June 30, 2002, resulting in stockholders
equity of $2,861,407, an increase of $757,404 from the December 31, 2001
balance of $2,104,003.

During the six months ended June 30, 2002, our cash decreased from $73,344
at December 31, 2001, to $28,764 at June 30, 2002. Net cash used in operating
activities was $834,391 for the six months ended June 30, 2002, including
decreases in accounts receivable of $233,801 (primarily from write downs),
increases in inventory of $60,360, and decreases in accounts payable of
$24,414.

Net cash generated from financing activities during the six months ended
June 30, 2002 was $778,980, consisting of proceeds received from sales of stock
of $753,700, collections of loans to shareholders of $31,332, less payments of
$6,052 made on a promissory note to Columbia Bank.

As a result of the foregoing, at June 30, 2002 we had working capital of
$244,863, including $732,561 in net trade accounts receivable and $475,651 in
inventory. We have provided and may continue to provide payment term
extensions to certain customers from time to time. As of June 30, 2002 we have
not granted material payment term extensions.

Our inventory balance at June 30, 2002, was estimated to be $475,651. We
do not take inventory on a quarterly basis, and we made inventory estimates
based on annual inventory determinations. With expected increased product
sales, we will need to make increased inventory expenditures. However, the
terms of our product sales generally requires a twenty five percent (25%)
deposit on order. In addition, we endeavor to keep inventory levels low.
Therefore, we do not believe that increased product sales, associated materials
purchases and inventory increases, will adversely affect liquidity.

Under our outstanding employment and consulting agreements, we are
obligated to pay Mr. Than $96,000 per year. Mr. Than has been paid
intermittently and we expect to become current with his compensation this
fiscal year. If we terminate the employment of Mr. Than without cause or
because of merger, acquisition or change in control, we will be obligated to
pay him approximately $350,000 in severance payments on a three-year period.

We believe that cash from operations and funds available will not be
sufficient to meet anticipated operating capital expenditure and debt service
requirements for the next twelve months and that we will be dependent on
raising additional capital through equity sales or debt financing.

We also have outstanding warrants with various investors with an exercise
price of $.40 per share. If the warrant holders exercise all of their
warrants, at the exercise





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VIEW SYSTEMS, INC.

price of $.40 per share, we will receive $800,000, which we will use for
additional working capital.

Plan Of Operation

The amount of capital that we need to raise will depend upon many factors
primarily including



| |  |  | the rate of sales growth and market acceptance of our
product lines;                      
| | - |  | ------------------------------------------------------------------------------------------
|
| |  |  | the amount of investment needed to set up
manufacturing of the CWD units at our facility.;
|
| |  |  | the amount and time of expenditures to sufficiently
market and promote our products;      

| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | We intend to use the cash raised from the private sale of shares and the
exercise of warrants held by the Selling Stockholders to the following:



| |  |  | bring our Concealed Weapons Detection and recording
flash light devices to market;             
| | - |  | -----------------------------------------------------------------------------------------------
|
| |  |  | continue our product development efforts;                                                      
|
| |  |  | expand our sales, marketing and promotional
activities for the SecureScan line of products; and
|
| |  |  | increase our engineering, production management,
quality control, and customer support staff.  

We operate in a very competitive industry that requires continued large
amounts of capital to develop and promote our products. We believe that it
will be essential to continue to raise additional capital, both internally and
externally, to compete in this industry.

In addition to accessing the public and private equity markets, we will
pursue bank credit lines and equipment lease lines for certain capital
expenditures. We currently estimate we will need between $3 million and $4
million to fully develop all our products and launch our expanded business
operations in accordance with our current business plan.

Risk Factors and Cautionary Statements

Statements within the Form 10-QSB which are not historical facts,
including statements about strategies and expectations for new and existing
products, technologies, and opportunities, are forward-looking statements that
involve risks and uncertainties. Our actual results may differ substantially
from such forward-looking statements. Forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from
those expressed or implied by the statement, including, but not limited to,
risks detailed in our other securities filing, including our Annual Report on
Form 10-KSB for the year ended December 31, 2001, and registration
statement, as amended, filed on Form SB-2.





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VIEW SYSTEMS, INC.




PART II.   OTHER INFORMATION




ITEM 1.   LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings that would have a material
effect on our operations.




ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

-Not Applicable




ITEM 3.   DEFAULTS UPON SENIOR SECURITIES:

-Not Applicable




ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None




ITEM 5.   OTHER INFORMATION

-Not Applicable




ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K:

|     |  |                                                           
|---- |  | ----------------------------------------------------------
|3.1  |  | Articles of Incorporation and all articles of amendment(1)
|3.2  |  | By-laws(1)                                                
|99.1 |  | Certification of Chief Executive Officer                  
|99.2 |  | Certification of Chief Financial Officer                  



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|(1) |  | Incorporated By Reference From Issuers Registration Statement on Form SB-2
Filed With The Securities & Exchange Commission On January 11, 2000
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------







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##### Table of Contents



VIEW SYSTEMS, INC.




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on
its behalf by the undersigned, thereunto duly authorized.

VIEW SYSTEMS, INC.

(Registrant)


|                       |                                             
|---------------------- | --------------------------------------------
|Date:  August 14, 2002 | /s/
GUNTHER
THANGUNTHER THAN
PRESIDENT & CEO