U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 2001

            |_| TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

            For the transition period from __________ to ___________

                         Commission File Number 0-30178
                                     -------

                               VIEW SYSTEMS, INC.
     -----------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

Florida                                                  59-2928366
-------------------------------             ------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

                             925 West Kenyon Avenue,
                            Englewood, Colorado 80110
                    ----------------------------------------
                    (Address of Principal Executive Offices)

                                 (303) 783-9153
                -------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

     -----------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

Yes       No ___
    ---

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.

Yes  X    No ___
    ---



<PAGE>

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  12,322,620 shares of common stock as
of March 31, 2001.

Transitional Small Business Disclosure Format (check one):
Yes ___    No  x
              ---




<PAGE>

                                Table of Contents


PART I.  Financial Information

Item I.  Financial Statements
Consolidated Balance Sheet.....................................................1
Consolidated Statement of Operations...........................................2
Consolidated Statement of Stockholder's Equity.................................3
Consolidated Statement of Cash Flows...........................................4
Notes to Consolidated Financial Statements.....................................5
Item II.  Management Discussion and Analysis...................................7

PART II.  Other Information

Item I.  Legal Proceedings....................................................10
Item II.  Changes In Securities...............................................10
Item III.  Defaults Upon Senior Securities....................................10
Item IV.  Submission of Matters To A Vote of Security Holders.................10
Item V.  Other Information....................................................11
Item VI.  Exhibits And Reports On Form 8-K....................................11



<PAGE>

ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                                                   VIEW SYSTEMS, INC.
                                              CONSOLIDATED BALANCE SHEET

                                                       ASSETS
                                                                        March 31,                December 31,
                                                                          2001                      2000
                                                                       -----------               ------------
                                                                       (Unaudited)
<S>                                                                    <C>                       <C>
CURRENT ASSETS:
    Cash                                                                $  49,503                $  265,245
    Accounts receivable (net)                                             357,091                   155,017
    Inventory                                                             123,195                    95,339
                                                                       ----------                ----------

             Total current assets                                         529,789                   515,601
                                                                       ----------                ----------

PROPERTY AND EQUIPMENT:
    Equipment                                                             386,286                   382,609
    Leasehold improvements                                                 20,261                    20,261
                                                                       ----------                ----------
                                                                          406,547                   402,870
        Less accumulated depreciation                                      91,005                    79,814
                                                                       ----------                ----------

             Net value of property and equipment                          315,542                   323,056
                                                                       ----------                ----------

OTHER ASSETS:
    Goodwill                                                              866,099                   894,383
    Investments                                                            28,000                    28,000
    Due from affiliated entity                                            105,552                   105,552
    Due from stockholders                                                    -                       20,000
    Deposits                                                                  780                       832
                                                                       ----------                ----------

             Total other assets                                         1,000,431                 1,048,767
                                                                       ----------                ----------

             TOTAL ASSETS                                              $1,845,762                $1,887,424
                                                                       ==========                ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable                                                   $  450,292                $  401,247
    Note payable - bank                                                    27,083                    42,083
    Notes payable                                                         110,000                   110,000
    Accrued interest payable                                               24,750                    22,000
    Other accrued liabilities                                               1,477                    31,951
    Due to stockholder                                                     11,847                     2,090
                                                                       ----------                ----------

                  Total current liabilities                               625,449                   609,371
                                                                       ----------                ----------

STOCKHOLDERS' EQUITY:
    Common stock - par value $0.001
      50,000,000 shares authorized,
      12,041,031 shares issued and outstanding                             12,041                       -
      11,481,031 shares issued and outstanding                               -                       11,481
    Additional paid-in capital                                          7,588,942                 7,364,502
    Accumulated deficit                                               ( 6,380,670)              ( 6,097,930)
                                                                       ----------                ----------

                  Total stockholders' equity                            1,220,313                 1,278,053
                                                                       ----------                 ---------
         TOTAL LIABILITIES AND
            STOCKHOLDERS' EQUITY                                       $1,845,762                $1,887,424
                                                                       ==========                ==========

</TABLE>


                            See Accompanying Notes

                                                      - 1 -
<PAGE>
<TABLE>
<CAPTION>
                                                   VIEW SYSTEMS, INC.

                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                                FOR THE THREE MONTHS ENDED

                                                                          March 31,                March 31,
                                                                            2001                     2000
                                                                       --------------          --------------
                                                                       (Unaudited)               (Unaudited)
<S>                                                                    <C>                       <C>
REVENUE:
         Sales of security systems                                     $  341,709                $  17,900
         Sales of assembled electronic components                           9,512                   92,512
                                                                       ----------                ---------

              Total sales                                                 351,221                  110,412

         Cost of goods sold                                               143,910                   60,395
                                                                       ----------                ---------

GROSS PROFIT ON SALES                                                     207,311                   50,017
                                                                       ----------                ---------

OPERATING EXPENSES:
         Advertising and promotion                                            577                   10,418
         Amortization                                                      28,284                   27,281
         Depreciation                                                      11,191                   12,890
         Dues and subscriptions                                               720                      820
         Insurance                                                          7,503                    2,633
         Interest                                                           5,756                    6,190
         Investor relations                                                33,084                   33,865
         Miscellaneous expense                                              7,380                    1,699
         Office expenses                                                   26,277                   36,216
         Professional fees                                                114,331                   96,378
         Rent                                                              40,006                   27,985
         Repairs and maintenance                                            3,441                    4,493
         Research and development                                             -                     63,765
         Salaries and benefits                                            173,706                  131,040
         Sales promotions                                                  17,119                   26,513
         Taxes - other                                                      6,930                    4,205
         Travel                                                             8,559                   16,905
         Utilities                                                          5,187                    2,985
                                                                       ----------                ---------

                  Total operating expenses                                490,051                  506,281
                                                                       ----------                ---------

NET LOSS FOR THE THREE MONTHS                                         $(  282,740)              $( 456,264)
                                                                      ===========               ==========

LOSS PER SHARE:
     Basic                                                            $(     0.02)              $(    0.06)
                                                                      ===========               ==========

     Diluted                                                          $(     0.02)              $(    0.06)
                                                                      ===========               ==========
</TABLE>

                                                          - 2 -
<PAGE>
<TABLE>
<CAPTION>


                                                     VIEW SYSTEMS, INC.

                                   CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                       FOR THE PERIOD JANUARY 1, 2000 TO MARCH 31, 2001


                                                              Additional                               Total
                                               Common         Paid-In         Accumulated           Stockholders'
                                               Stock          Capital           Deficit                Equity
                                               -----          -------         -----------           -------------

<S>                                            <C>            <C>             <C>                   <C>
Balances at January 1, 2000                    $   7,167      $  5,334,342    $(  3,893,648)       $   1,447,861

    Sale of common stock                             857           509,918            -                  510,775

    Stock options  exercised                          85               845            -                      930

    Net loss for the three months
      ended March 31, 2000                            -                -       (    456,264)         (   456,264)
                                                --------         ------------  -------------         ------------
Balances at March 31, 2000 (Unaudited)             8,109         5,845,105     (  4,349,912)           1,503,302

    Sale of common stock                           1,986           938,179            -                  940,165

    Stock options exercised                            3                49            -                       52

    Issuance of common stock
      (employee and other compensation)            1,383            581,169           -                  582,552

    Net loss for the period of April 1, 2000
      to December 31, 2000                            -                -       (  1,748,018)         ( 1,748,018)
                                                --------         ------------  -------------         ------------
Balances at December 31, 2000                     11,481          7,364,502    (  6,097,930)           1,278,053

    Sale of common stock                             500            199,500            -                 200,000

    Issuance of common stock
          for services                                60             24,940            -                  25,000

    Net loss for the three months
        ended March 31, 2001                          -                -       (   282,740)          (   282,740)
                                                --------         ------------  ------------          ------------

Balances at March 31, 2001 (Unaudited)         $  12,041      $   7,588,942   $( 6,380,670)        $   1,220,313
                                                  ======          ==========   ============         =============

                                                  - 3 -

</TABLE>
<PAGE>

<TABLE>
<CAPTION>


                                              VIEW SYSTEMS, INC.

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         FOR THE THREE MONTHS ENDED




                                                                           March 31,                March 31,
                                                                            2001                      2000
                                                                       --------------            ---------------
                                                                       (Unaudited)               (Unaudited)

<S>                                                                    <C>                       <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                           $(  282,740)              $(  456,264)
    Adjustments to reconcile net income to net cash
       provided by operating activities:
       Depreciation                                                         39,475                    40,171
       Stock issued for services                                            25,000                      -
       Changes in operating assets and liabilities:
         Accounts receivable                                            (  202,074)                    6,165
         Inventory                                                      (   27,856)               (    5,449)
         Deposit                                                                52                      -
         Accounts payable                                                   49,045                (   48,047)
         Accrued interest                                                    2,750                     2,750
         Other accrued liabilities                                      (   30,474)                   15,904
                                                                        -----------               -----------

         Net cash used in operating activities                          (  426,822)               (  444,770)
                                                                        -----------               -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
          Purchase of property and equipment                            (    3,677)               (   22,743)
          Funds advanced to affiliated entities                               -                       10,278
                                                                        -----------               -----------

        Net cash used in investing activities                           (    3,677)               (   12,465)
                                                                        -----------               -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
         Funds advanced from  (to) shareholders                             29,757                (   20,000)
         Repayment of note payable - bank                               (   15,000)               (    1,616)
         Proceeds from sales of stock                                      200,000                   511,705
                                                                        -----------               -----------

       Net cash provided by financing activities                           214,757                   490,089
                                                                        -----------               -----------

NET DECREASE /(INCREASE) IN CASH                                        (  215,742)                   32,854

CASH AT BEGINNING OF PERIOD                                                265,245                    89,150
                                                                        -----------               -----------

CASH AT END OF PERIOD                                                  $    49,503               $   122,004
                                                                       ============              ============

</TABLE>


                                                  - 4 -

<PAGE>





                               VIEW SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000



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.
Operations,  from  formation  to June 30, 1999,  have been devoted  primarily to
raising  capital,  developing  the  technology,  promotion,  and  administrative
function.  As of July 1, 1999 the Company was no longer  considered to be in the
development stage.

          Basis of Consolidation
          ----------------------

          The  consolidated  financial  statements  include the  accounts of the
Company  and its wholly  owned  subsidiaries,  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.  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).

          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
years  ended   March  31,  2001  and  2000   amounted  to  $11,191  and  $12,890
respectively.


                                     - 5 -



<PAGE>

                               VIEW SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000


          Imairment 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.

          Advertising
          -----------

          Advertising costs are charged to operations as incurred.

          Monetary Transactions
          ---------------------

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

          Financial Instruments
          ---------------------

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

          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 years ended March 31, 2001 does
not include potential shares of common stock equivalents,  as their impact would
be antidilutive.


                                     - 6 -

<PAGE>



                               VIEW SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2001


          Segment Reporting
          -----------------

          The  company  has  determined  that it does not  have  any  separately
reportable operating segments as of March 31, 2001.

2.  FINANCIAL CONDITION

          Since its inception,  the Company has incurred  significant losses and
as of March 31, 2001 had an  accumulated  deficit of $6.4  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 March 31, 2002.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

          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, 2000. 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, we have devoted most
of our  resources  to the  development,  sale and  marketing  of  digital  video
surveillance and security products.  We have generated limited revenues from our
security  products to date, but are rapidly expanding our sales and distribution
network.  At the same time we are working on  delivering  new products to market
and enhancing  and  upgrading our product line.  Until we more fully develop our
product line and our sales and  distribution  network,  we expect our  operating
losses to continue. We have provided contract  manufacturing services since May,
1999,  when we acquired  ETMC.  ETMC had provided such services for more than 15
years and had an  established  customer  base.  We have  continued  the contract
manufacturing  business line, while increasing ETMC's manufacturing  capacity to
permit production of our products.

Three  Months  Ended March 31, 2001  Compared  With the Three Ended Months Ended
March 31, 2000

Revenue

          For the three months ended March 31, 2001,  revenues from sales of our
products  increased  $323,809  or 1,809% to  $341,709  from  $17,900 in the same
period last year, and revenues from sales of our services  decreased  $83,000 or
90% to $9,512  from  $92,512 in the same period  last year.  Of the  $351,221 in
total  revenue  during the three month period ended March 31, 2001,  $341,709 or
97% was  derived  from sales of systems  and $9,512 or 3% from sales of contract
manufacturing  services.  The  ratio  of  security  systems  sales  to  contract
manufacturing is increasing.

Gross Profit

          Gross  profit on sales  for the three  months  ended  March 31,  2001,
increased $157,294 or 314% to $207,311 compared with $50,017 in same period last
year.  Gross       profit          margin         for     the              three

                                     - 7 -
<PAGE>

months ended March 31, 2001,  was 59% compared  with 45% in the same period last
year.  Because of low net sales we  achieved in the period last year ended March
31, 2000, we do not believe gross profit margin  comparisons  are  meaningful at
this stage of our operations.

Operating Expenses

          Operating  expenses  for  the  three  months  ended  March  31,  2001,
decreased to $490,051, compared with $506,281 for the comparable period in 2000.
The decrease is principally due to decreased expenditures in R & D and increases
in salaries and professional fees.

          As a result of the  foregoing,  net loss was  $(282,740) for the three
months ended March 31, 2001,  compared to a net loss of $(456,264) for the three
months ended March 31, 2000.

Costs and Expenses

          Costs of Products and Services Sold. The cost of products and services
sold,  was $143,910 for the three months ended March 31, 2001,  and  represented
41% of revenue for the period,  compared to $60,395 for the three  months  ended
March 31, 2000 which represents 55% of revenues for that period.  Because of our
low sales  volume in the same period last year,  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 anticipate  that our
profit  margins on sales of security  systems will exceed our profit  margins on
sales of services.  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  $0  on  research  and
development  for the three months ended March 31, 2001, as compared with $63,765
in the same period last year.  Our R&D  expenditures  in the three  months ended
March 31, 2001,  represented  0% of gross profit margin for this period.  We are
working on  introducing  additional  products  to the market in 2001.  We expect
continued heavy expenditures in this area,  evidencing our commitment to develop
industry leading video management and identification products.

          Salaries and Benefits.  We spent $173,706 on salaries and benefits for
the three  months ended March 31, 2001,  as compared  with  $131,040 in the same
period last year. We have  increased  expenditure on salaries and fees for sales
and marketing personnel, including consultants, and we incurred $17,119 on sales
and  promotional  expenses for the three month  period ended March 31, 2001,  as
compared with $26,513 in the same period a year ago.

          Net  Operating  Loss.  We  incurred  approximately  $(282,740)  of net
operating loss carry forwards for the  three-month  period ended March 31, 2001,
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 $6,987,259 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 equity to fund operating activities, including,
product  development,  sales and marketing,  and to invest in the acquisition of
technology,  assets and business. As of March 31, 2001, we had total assets of $
1,845,762,  a decrease of approximately  $42,000 over last year's  $1,887,424 at
December 31, 2000. Total liabilities were $625,449, at March 31, 2001, resulting
in stockholders'  equity of $1,220,313,  a decrease of $57,740 from the December
31, 2000 balance of $1,278.053.


                                     - 8 -
<PAGE>



          During the three months ended March 31, 2001,  our cash decreased from
$265,245 at December  31, 2000,  to $49,503 at March 31, 2001.  Net cash used in
operating  activities  was  $426,822  for the three months ended March 31, 2001,
including decreases in accounts  receivable of $202,074,  increases in inventory
of $27,856, and increases in accounts payable of $49,045.

          Net cash generated from financing  activities  during the three months
ended March 31, 2001 was $214,757, consisting of proceeds received from sales of
stock of $200,000,  plus 29,757  advanced  from  stockholders,  less payments on
$15,000 made on a promissory note to Columbia Bank with an outstanding principal
balance of $27,083 at March 31, 2001.

          As a result  of the  foregoing,  at  March  31,  2001 we had  negative
working capital of $95,660,  including $357,091 in net trade accounts receivable
and $123,195 in inventory.  We have provided and may continue to provide payment
term  extensions to certain of our customers  from time to time. As of March 31,
2001 we have not granted material payment term extensions.

          Our inventory balance at March 31, 2001, was estimated to be $123,195.
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  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.

          We   anticipate   further   expenditures   for  fiscal  year  2001  of
approximately $100,000 for test equipment. We are also exploring the purchase of
the commercial space we are leasing in Columbia, Maryland, plus adjoining space,
consisting  of  approximately  10,000  square feet.  If we can obtain  favorable
terms, we would purchase the building through debt financing.

          Under our  outstanding  employment and consulting  agreements,  we are
obligated to pay Mr. Than $96,000 per year, Mr. Lesniak $84,000 per year and Mr.
Bruggeman  $85,000 in salary and fees during calendar year 2001. 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 over 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.  In this offering we
are  registering  600,000 shares of common stock for resale that can be obtained
from the exercise of warrants held by Columbia  Financial  Group, LLC and Magnum
Financial  Group,  LLC. If Columbia  Financial  Group,  LLC and Magnum Financial
Group,  LLC exercise all of their  warrants,  we will receive  $625,000 which we
will use for working capital.

          We also have  outstanding  warrants  with  various  investors  with an
exercise price of $.40 per share which is less than its recent market price.  If
the warrant  holders  exercise all of their  warrants,  at the exercise 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:

          o    the rate of sales  growth and market  acceptance  of our  product
               lines;
          o    the amount  and  timing of  necessary  research  and  development
               expenditures;
          o    the amount and timing of expenditures to sufficiently  market and
               promote our products ; and

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<PAGE>

          o    the amount and timing of any accessory product introductions.

          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:

          o    bring our ViewStorage, WebView and CareView products to market;
          o    continue our product development efforts;
          o    expand our sales,  marketing and  promotional  activities for the
               SecureView line of products; and
          o    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 of our products  and launch our expanded  business
operations in accordance with our current business plan.

 RISK FACTORS AND CAUTIONARY STATEMENTS

          Statements   within  this  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 in or implied by the statements,  including, but not limited to,
risks detailed in our other securities  filings,  including our Annual Report on
Form  10-KSB  for the  year  ended  December  31,  2000,  and  our  registration
statement, as amended, filed on Form SB-2.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

          We are not aware of any material pending legal  proceeding  against us
or our property.

ITEM 2. CHANGES IN SECURITIES

          We are not aware of any material pending legal  proceeding  against us
or our property.



                                     - 10 -

<PAGE>




ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     There are no changes in securities other than such changes reported in
our SB-2/A filed on March 29, 2001, registration number 333-55394.



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

     Inapplicable

ITEM 5. OTHER INFORMATION

     Inapplicable

ITEM 6. EXHIBITS AND REPORT ON FORM 8-K

(A)      EXHIBITS:
         --------

3.1      (1)      Articles of Incorporation
3.2      (1)      By-laws
11.      (attached to report)    Statement re: Computation of Per Share Earnings

--------------------------------------------------------------------------------

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

(B)      REPORTS ON FORM 8-K
         -------------------

          We did not file any  reports on Form 8-K during the  quarter for which
this report is filed.


                                     - 11 -


<PAGE>





                                   SIGNATURES


In  accordance  with  the  requirements  of the  Securities  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.



                                                 View Systems, Inc.
                                                 Registrant



Date:  May 15, 2001                             /s/ GUNTHER THAN
                                                ----------------
                                                       GUNTHER THAN
                                                    PRESIDENT & CEO




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