UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under section 12(b) or (g) of the Securities Exchange Act of 1934
Commission File Number: 0-30178
VIEW SYSTEMS, INC____________________
(Name of small business issuer in its charter)
FLORIDA 59-2928366
(States of other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
925 W. Keynon Street , Suite 15, Englewood, CO 80110
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (303) 783-9153
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
To be so registered each class is to be registered
N/A N/A
Securities registered under Section 12 (g) of the Exchange Act:
Common stock, par value $.001 per share
(Title of class)
(Title of class)
At December 31, 1998, the aggregate market value of the voting stock held by
non-affiliates is was $3,301,038.00.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Issuer had 4,166,767, 4,816,667, 5,595,667 as of December 31, 1998, March 31,
1999, and June 30, 1999, respectively.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the part of the form 10-SB (e.g., part I, part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders; (2)
any proxy or other information statement; and (3) Any prospectus filed
pursuant to rule 424 (b) or (c) under the Securities Act of 1933: None
VIEW SYTEMS, INC.
FORM 10 - SB
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Description of Business . . . . . . . . . . . . . . . . . 3
ITEM 2. Management's Discussion and Analysis or Plan of Operation 10
ITEM 3. Description of Property . ... . . . . . . . . . . . . . . . 15
ITEM 4. Security Ownership of Certain Beneficial Owners and Management 16
ITEM 5. Directors, Executive Officers, Promoters and Control Persons 16
ITEM 6. Executive Compensation. .. . . . . . . . . . 19
ITEM 7. Certain Relationships and Related Transactions. . . . . 20
ITEM 8. Description of Securities. . . . . . . . . 21
PART II
ITEM 1. Market Price of and Dividends on Registrant's Common Equity and
Othe Related Transactions, page 17)
On February 25, 1999, the Company acquired all of the issued and outstanding
shares of Xyros Systems, Inc., a Maryland corporation, through a share
exchange whereby 150,000 of the Company's non-registered, restricted
stock was exchanged for all of the shares of Xyros Systems, Inc. Xyros
had developed a product called the RM-1600, which permitted remote
monitoring and storage of video captured by video cameras. Xyros was a
privately held development stage company that had generated limited
revenues from the
products and had an accumulated earnings deficit of $91,155.00 through
December 31, 1998. The Company absorbed much of the Xyros staff and
Xyros intellectual property, integrating the engineering from the RM-1600
products into the SecureView line of products.
On May 25, 1999, the Company acquired all of the stock of Eastern Tech
Manufacturing Corp. in exchange for 250,000 shares of the Compa BIGI,
Inc., on July 21, 1998, and to View Systems, Inc., on September
22, 1998.
The Company has acquired all of the stock of three corporations that
are now wholly owned subsidiaries. On October 6, 1998, the Company
acquired all of the outstanding stock of RealView Systems, Inc.
("RealView"), a Colorado corporation, pursuant to an exchange whereby
shareholders received 1.33 shares of non-registered, newly-issued
restricted Company stock in exchange for 1 share of RealView stock.
RealView had developed a software program for use in the real estate
market, and had limited sales of the program in that market. RealView's
software program used some innovative software compression inputs, which
we believed we could further develop for use with View Systems products.
In addition, RealView had a license agreement with a related company,
View Technologies, Inc., to license its compression software for use in
non-medical markets and had relationships with scientists that we believed.
we could employ for the Company's benefit. (see Certain Relationship and
Related Transactions, page 17)
ssfully concluded on February 8, 1998, with the sale of 666,667 shares
and total proceeds to the Company of $1,000,000. The total proceeds of
the offering will be used by the Company to fund its operations and other
capital needs for the coming year.
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Products
The Company has developed digital, as opposed to analog, closed circuit
television (CCTV) systems, which permit cameras to be remotely monitored
and the video captured by those cameras to be stored on hard disk. The
Company has been improving the quality of the video, refresh rates and
storage capabilities of its digital systems through engineering work,
including, without limitation, innovative compression software routines.
The Company is also adding features to its systems, which expand systems
functionthe systems better overall security and surveillance systems that
provides expanded customer solutions. In July 1999, the Company introduced
to the market the SecureView-4, which is a system that takes 4-camera
inputs, and provides 4 alarm inputs, 4 outputs, and 4 relays. In many ways
the SecureView-4 embodies all of the engineering development work of the
Company (including the companies we have acquired) to date.
The SecureView( Line of Products
SecureView( is a digitally recorded, remote monitoring system that allows
a user to view its existing closed circuit television (CCTV) system from
any location in the world. Using standard telecommunication lines, Secure
View provides a user with the flexibility and peace of mind to maintain its
business operations. From across town or halfway around the world a user
is only a phone call away, from viewing its business. By combining industry
leading video compression technology with any standard computer,
allows a user to take its business on the road.
The FaceView( Solution
FaceView is a self-contained facial identification system using the most
advanced Biometrics technology to provide one of the highest levels of
security available. This easy to use system compares an individual's face
print to a database of previously approved faces, then delivers a quick and
accurate identification. By using ViewSystems SecureView( a user can
administer this FaceView( application across town or half way around the
world. The Company licenses facial identification and database software
leading facial identification software vendors, in order to offer the Face
View( solution.
The CareView( Solution
Parent's rising concerns about the safety of their children at home with a
baby sitter or nanny, in day care centers - as well as the treatment of a
loved one in a nursing home - have created the need for a way of monitoring
activities in these facilities. The Company is developing the CareView(
system as an ideal option for the day care facility, which may even provide
an additional revenue source for the facility. A child's parent can access
the day care's Web Site and immediately be able to see their choldren
Than reassurance, this "middle of the day" check on their child can be a
way of marketing the facility to potential clients.
In addition to these products, the Company has begun work on a low-priced
retail product that allows a user to capture camera output from a single
camera and view it remotely. The Company is also developing a low-cost
product, which acts as a digital storage device fitting existing CCTV
systems and replacing VCRs as the CCTV storage medium.
The Company's family of products offer government, military and law
enforcement agencies, commercial security professionals, and other
private businesses and citizens a dramatically enhanced surveillance
capacity utilizing innovative compression and decompression of digital
inputs. It also offers a more efficient and economical method to store,
search and retrieve historically stored data.
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Surveillance devices are common today and are generally used as a proven
method for protection and risk management. They are routinely used in
military, law enforcement, residential, commercial, and industrial
applications. The most common surveillance systems used today capture
video and sound data and then transmit them to a VCR where the information
is monitored and stored in tape format. This provides a historical record
that could then potentially be used for information, identification, legal
or in
ses.
The current technology system for the real-time transmission of video data
is the analog closed circuit television (CCTV) system. This requires
cabling between the data generator (some type of camera) and a tape
recording device (a VCR) at the receiving end for archiving. However,
VCRs are expensive to maintain, tape images degrade overtime and tapes
are burdensome to store. VCRs are also inefficient to search and review
images post-incident. This type of video/sound recording is not compatible
with remo
ause there are significant time delays associated with recording analog
data on tape, transmitting or hand-carrying it and later accessing it.
Thus, much of the information captured by an analog CCTV system, becomes
stale and unusable to make immediate critical decisions.
The Company has identified the following key potential markets for its
digital surveillance and security systems: (1) all branches of the military
services, (2) federal, state and local law enforcement agencies, (3)
commercial security companies, and (4) the residential home security market.
Residential
The residential home security market encompasses both commercial companies
installing either self-contained or centrally monitored systems and also
the do-it-yourself market. While not as large or as lucrative as the
commercial market, the residential market still represents a large market
potential. The major obstacle to marketing in the residential market is
convincing the individual homeowner of the need for investing in a security
system which would include such items as an alarm and surveillance sys
r monitoring systems and hidden monitoring of the activities of persons
in the household, such as a care cam or nanny cam.
Utilizing the Company's technology, individuals can run their own perimeter
and interior surveillance systems from their own home computer and can
remote monitor real-tine action at their homes through a modem. Thus,
there is the capability to make real-time monitors wireless. In turn,
this reduces the expense and time of the home installation and makes
installation affordable for a majority of homeowners.
An additional advantage of the Company's technology is that it allows
for the storage of information on the home computer and does not
necessitate using a VCR and high capacity VCR tapes. Also, it allows
for wireless installation of input devices, making concealment easier.
Commercial
Company management believes that the commercial market represents the
greatest potential for sales of its enhanced surveillance products.
Commercial businesses have already realized the need for using surveillance
devices for protection. As such, sales resistance is generally lower as
the commercial customer is more educated. The major use for the Company's
technology would be monitoring. This provides observation of facilities for
protection of employees, customers, and assets, which result in the curt
ime and loss prevention, by employees and others. It would also reduce
employee theft, violence in the workplace, fraud, white collar crime and
provides proof of who may have committed the offense. The market for this
technology is the same as the current market for analog CCTV systems, and
would include hospitals, schools, museums, retail manufacturing, and
warehousing.
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The benefits, which the customers derive, are plentiful. It reduces the
requirements for a physical guard force and a lesser number of security
personnel can monitor, verify, and respond to tripped alarms. It also
provides companies such as ADT, Brinks, and Ameritech another capacity to
remotely monitor facilities.
Another potential use for the Company's technology is where there is a
temporary requirement for real-time surveillance in areas where an analog
CCTV system is impractical or impossible. Examples of this condition are
special events, concerts, and conventions; the Company's systems reduce the
need for a large guard force and provides unobtrusive monitoring of these
events. The Company's systems provide for the rapid deployment and recovery
of devices while minimizing the likelihood that the observation d
avoided or neutralized.
Law Enforcement
The gathering of video image and data images is commonplace in today's law
enforcement environment. The data is used to protect both the law
enforcement officer and the suspect. It is also used as a historical
record for prosecution and event verification.
The Company's technology can be used for stakeouts, remote monitoring of
areas and as such, there is a big potential market with federal law
enforcement agencies. Some of the lesser-known agencies, such as the
National Park Service and the Department of Forestry are required to
monitor large areas and yet have limited personnel to do so. The Company's
monitors are the solution to this manpower problem. The Company's
monitoring devices can be engineered so that they transmit only when an
alarm is trigger
Another use for the Company's products is with robotics. More than ever,
robotic units are used to investigate and disarm potential explosive
devices. These robots are guided by a closed circuit video system,
which are limited by the required cabling. The Company's technology
eliminates this problem.
Military
The Company believes that there are numerous applications for the use of
the Company's technology in the areas of combat survivability, command and
control systems and the gathering and dissemination of intelligence.
Generally, intelligence can be gathered through human or mechanical means.
Special operations units (SEALS, Special Forces, Marine Recon, etc.)
currently use digital cameras to capture information. The technology to
send this information in an ever-changing battlefield, is limited. The
Com able systems provide the capability to transmit real-time information
video to enhance decision-making capabilities of persons not present and
thereby give instantaneous information to military forces in the
battlefield.
Another use for the Company's technology is that it can provide immediate
post-strike damage assessment capability without requiring reliance on
human, overflight and satellite confirmation. This makes an immediate
second strike possible in the event that a target was not sufficiently
neutralized.
Availability of Materials and Supplies
The Company has developed the operating software used on its systems and
it has designed the hardware for its systems. It licenses facial
identification software and compression software, under terms derived
from strategic business relationships that have been developed over time.
The hardware, integrated into the Company's systems is freely available
from a number of different vendors, and we do
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not anticipate any problems obtaining the supplies necessary to build the
Company's products. Eastern Tech has long been in the business of procuring
electronic components from vendors and assembling then into larger systems.
Production
The engineering and manufacturing facility for View's products is an 8,000
square foot facility located at: 9693 Gerwing Lane Suite 0
Columbia, MD 21046
The Company will engineer, manufacture, assemble and ship from this facility.
Market
The market for the SecureView( line of products is believed to
be $2,000,000,000 per year, with this market size increasing at a rate
of 13 - 17% per year. The market consists of replacement of existing
analog CCTV components, including VCR recording devices and multiplexers,
and new system demand because of the increased functionality inherit in the
SecureView( digital systems. The SecureView( products are aimed at the
residential, commercial, government and law enforcement markets, being
set at price p
re cost effective and affordable for end users wishing to provide
surveillance and security systems in their operations. The Company
will distribute its SecureView( products to these markets through a
network of value-added resellers, OEMs and strategic partners. The
Company currently has ongoing VAR agreements with 14 small and medium
sized domestic and international resellers and is actively selling its
products domestically and internationally. The Company is also in
discussions with some very large
law enforcement integrators about VAR and OEM distribution agreements.
In the short term, we will rely on our existing value added reseller
network to generate sales revenue; ultimately, however, we believe we will
have to be successful in negotiating VAR and OEM agreements with the larger
companies. Although discussions are progressing nicely with large VAR and
OEM distributors, there is no assurance that the Company will be able to
reach and maintain these agreements.
The Company is also developing products for retail sale through retail
distributors such as CompUSA, Best Buy, and Circuit City. These products
will be priced at a level which is attractive to retail consumers. These
products will contain much less functionality than the SecureView( line of
products, permitting a user to simply remotely access the video output from
one camera. Similarly, the Company is developing a low cost VCR
replacement system that will fit existing analog CCTV systems. The
market products is estimated at in the billions per year, and is expected
to grow at a rate of 12 - 20% per year.
The market for CareView( is estimated at $500,000,000 per year, with
extensive growth anticipated over time. These products are aimed at
users of day care centers and senior citizen care facilities. These
populations are the largest growing segments of the population. As the
public becomes increasingly comfortable with computer use and multiple
computers become more commonplace in the home and office, the Company
expects market demand for this type of service to expand significantly.
The Company will
market through its reseller network, which, in turn, will derive significant
recurring revenue from servicing these systems.
The Company's subsidiary, Eastern Tech, has been in operation for over
fifteen (15) years and has an established base of clients for which it has
long done business. Traditionally, Eastern Tech has done approximately 60%
of its business for the commercial sector and 40% of its business for the
government sector. Eastern Tech's diverse clients include Hewlett-Packard,
IBM, Martin Marietta, Aero
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& Naval Systems, Maryland Government Procurement Office, Lockheed Martin,
and John Hopkins's Applied Physics Labs under contract to NASA.
The market for manufacturing and testing services of the Company's
subsidiary, Eastern Tech, is well established and is estimated to be
in the billions of dollars. This market is subject to cyclical swings.
Currently, the market demand for electronic manufacturing and engineering
design services is very good, and Eastern Tech plans to take advantage of
this climate to leverage View's engineering resources into new and expanded
service offerings and to expand its manufacturing base of clients and
business
Historically, Eastern Tech has limited itself to the multimillion dollar
electronic component assembly and testing market in the Baltimore-Washington
area; however, it plans to expand its marketing to provide assembly services
in other geographic regions in this country and internationally. Moreover,
the Company plans to expand Eastern Tech's service offerings to include
engineering design services. The market for these services is estimated
to be in the billions of dollars. The Company believes that it
ted in its market share only by the size of its production facilities and
the size of its engineering human resources. The Company plans to
aggressively pursue market share, and expand production capacity to enable
it to capture this market share.
Competition
There are a number of companies producing products that provide
capabilities similar to the Company's security and surveillance
products. Many of these companies are better financed and larger
than View Systems and some of them, such as Sensormatic, Javelin's
(ADEMCO) Rapid Eye and Prisim have been working in the CCTV market
for many years and are well established.
However, the introduction of digital technology to video surveillance
and security systems levels the playing field significantly. Many of
the established CCTV companies have approached the design of their digital
CCTV products from the standpoint of integrating to their existing security
and surveillance product offerings. As a result, these systems are closed,
not easily intergratable with other equipment and capable of upgrades as
technology improves. The Company does not have the baggage of having a
n the analog CCTV system market and its engineers have computer backgrounds.
As a result, it has designed its systems so that they are open, compatible
with other digital and analog systems, and easily adaptable to technological
advances that will inevitably occur with digital technology.
The Company believes that the functionality of the software for its systems
and the quality of the video transmitted by its systems make its security
and surveillance systems superior to those in their class. The Company
hopes to take advantage of the superiority of its systems in this rapidly
evolving new market to establish itself as an industry leader, and perhaps
an industry standard, for digital video security and surveillance systems.
Many of the competitors to the Company's subsidiary, Eastern Tech, provide
greater engineering services than those currently being provided by Eastern
Tech. By providing these services, these competitors put themselves in a
better position to obtain manufacturing contracts. Essentially, these
competitors leverage off of their engineering services to attract and grow
their manufacturing business and vice versa. Eastern Tech will be focusing
on building its capacity to deliver these services through use o
ring staff of View Systems. With the current robust state of the economy,
the demand for engineering design, development and manufacturing services
is at a high level. Therefore, Eastern Tech should be well positioned to
expand its sales revenues in its core business of manufacturing and in
complementary engineering design and development services.
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Research and Development
The Company has spent approximately $200,000.00 in Research and
Development (classifying engineering wages and development equipment
as Research and Development) and continues to refine its product line.
In addition, the Company's wholly owned subsidiaries Xyros and RealView
have collectively spent approximately $200,000 in product research and
development, much of which has been integrated into the Company's products,
(classifying engineering wages and development equipment as Research and
Development).
Patents and Trademarks
All trade identifiers for View's products have trademark protection. The
Company has not applied for patent protection for its products, although
it plans to apply for patent protection for some components of its products.
The designs integrated into its products are copyright protected and the
Company has taken steps to keep the designs confidential, protected trade
secrets. Toward this end, the Company's normal policy is to enter into
agreements with its business partners, employees, contractors, and ot
mpany has instituted steps in its
operations to make sure its designs are kept confidential. While the
Company has taken actions to protect its proprietary assets, no complete
protection is ever available. Investors will have to make a judgment upon
the experience and abilities of the management and employees of the Company
as opposed to any valuation upon intellectual property.
Employees
Presently, the Company currently employs 9 full time employees and 5
contractors who work on substantially a full time basis for the Company.
In addition, Eastern Tech employs 13 full-time employees. Management
intends to hire additional employees as needed and as funds are available.
In the case of new hires, they will be paid prevailing wages. The Company
also will use contract services that will preclude the necessity of hiring
full-time employees where it is in the business's best interest.
Facilities
The Company has an executive office at 925 W. Kenyon Street, Suite 15,
Englewood, CO 80110 and the Company also leases engineering and
manufacturing facilities at 9693 Gerwig Lane, Suite O, Columbia, MD 21046
Legal
The Company is not a part of any material pending legal proceedings and no
such action by, or to the best of its knowledge, against the Company has
been threatened.
Certain assets of the Company's wholly subsidiary, Eastern Tech, are the
subject of a civil asset forfeiture action initiated by the Federal Bureau
of Investigation, Washington Field Office (the "FBI"). On March 12, 1999
the FBI seized one corporate bank account holding $63,572.21 titled in the
name of Eastern Tech and a 1996 Chevrolet Tahoe and bank account holding
$43,321.49 titled in the name of Larry Seiler. Both Mr. Seiler and Eastern
Tech are contesting the asset forfeiture action and the matter has
d to the U.S. Attorney's Office for the District of Columbia.
The U.S. Attorney's Office for the District of Columbia and the FBI are
investigating Eastern Tech and Mr. Seiler in connection with certain
subcontracts Eastern Tech performed in 1996 and 1997 for
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Boeing, Inc., which in turn was performing contracts with the National
Space & Aerospace
Administration ("NASA"). In seizing the assets, the FBI has alleged
that Eastern Tech and Mr. Seiler paid kickbacks in connection with the
Boeing contracts and laundered moneys paid from this contract. Mr. Seiler
and Eastern Tech vigorously contest these allegations and are prepared to
take whatever actions are necessary to recover the seized assets. No civil
or criminal proceedings have been initiated with regard to this on-going
investigation.
The Company's officers and directors are aware of no other threatened
litigation, which would have a material, adverse effect on the Company.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
Overview
The Company was in developmental stage and achieved only nominal operation
until November 1998, when the Company acquired RealView, Inc., in exchange
for approximately 2,000,000 shares. Thereafter, the Company began the
development of the SecureView line of products which permits cameras to be
remotely monitored and the video captured by those cameras to be stored on
hard disk, and
received its first sales revenue in March, 1999. The Company has recently
introduced the SecureView-4,
which is a system that takes a 4-camera input, and provides 4 alarm
inputs, 4 outputs, and 4 relays. In many ways, the SecureView-4 will
embodies all of the engineering development work of the Company (including
the companies required) to date, and the Company believes the market
acceptance of this product will be great. The Company intends to market
this product in the commercial business, law enforcement, government, and
military markets.
The acquisition of Xyros System, Inc., a Maryland corporation, added
staff and intellectual property. Xyros had developed a line of products,
called the RM1600, and these products have been incorporated into the
SecureView product line. The Company has accounted for the acquisition of
Xyros under the pooling of interest method.
The May 25, 1999, acquisition of Eastern Tech Manufacturing Corp., allowed
the Company to acquire strategic assets and human resources. Eastern Tech
provides the Company with a captive manufacturer that enables the Company
to better manage quality control of its products. Eastern Tech is
implementing a quality control plan which is in compliance with the
requirements of ISO9002 and has consistently maintained high quality
control standards in its contract production work for large commercial
and government
, having maintained certifications that it produces in accordance with
MIL-I-45208 and MIL-STO-2000. The Company accounted for this business
combination under the purchase method.
Net Operating Loss
The Company has accumulated approximately $406,486 of net operating loss
carryforwards as of December 31, 1998, which may be offset against taxable
income and income taxes in future years. The use of these losses to reduce
income taxes will depend on the generation of sufficient taxable income
prior to the expiration of the net operating loss carryforwards. The
carryforwards expire in the year 2013. In the event of certain changes
in control of the Company, there will be an annual limitation on the amout
rating loss carryforwards, which can be used. No tax benefit has been
reported in the financial statements for the year ended December 31, 1998,
or for the six months ended June 30, 1999.
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Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 128, "Earnings Per Share" and Statement of
Financial Accounting Standards No. 129 "Disclosures of Information about an
Entity's Capital Structure." SFAS No. 128 provides a different method of
calculating earnings per share than is currently used in accordance with
Accounting Principles Board Opinion No. 15, "Earnings Per Share." SFAS No.
128 provides for the calculation of "Basic" and "Dilutive" ea
are. Basic earnings per share includes no dilution and is computed by
dividing income available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted earnings per
share reflect the potential dilution of securities that could share in the
earnings of an entity, similar to fully diluted earnings per share. SFAS
no. 129 establishes standards for disclosing information about an entity's
capital structure. SFAS no. 128 and SFAS no. 129 are effective for fi
ments issued for periods ending after December 15, 1997. Their
implementation is not expected to have a material effect on the
financial statements.
The Financial Accounting Standards Board has also issued SFAS No. 131,
No. 130, "Reporting Comprehensive Income" and SFAS no. 131, "Disclosures
about Segments of an Enterprise and Related Information." SFAS No. 130
establishes standards for reporting and display of comprehensive income,
its components and accumulated balances. Owners and distributors to owners
define comprehensive
income to include all changes in equity except those resulting from
investments. Among other disclosures, SFAS no. 130 requires that all
items that are required to be recognized under current accounting standards
as components of comprehensive income be reported in a financial statement
that displays with the same prominence as other financial statements. SFAS
no. 131 supersedes SFAS no. 14 "Financial Reporting for Segments of a
Business Enterprise." SFAS no. 131 establishes standards on the
way that public companies report financial information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial statements issued
to the public. It also establishes standards for disclosure regarding
products and services, geographic areas and major customer. SFAS no. 131
defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by the
ng decision maker in deciding how to allocate resources and in assessing
performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information
for earlier years to be restated. Because of the recent issuance of the
standard, management has been unable to fully evaluate the impact, if any
the standard may have on future financial statement disclosures. Results
of operations and financial position, however, will be unaffected by
implementation of the standard.
Inflation
In the opinion of management, inflation will not have a material effect on
the operations of the Company.
Risk Factors and Cautionary Statements
This Registration Statement contains certain forward-looking statements.
The Company wishes to advise readers that 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, the following: the ability of the Company to.
meet its cash and working capital needs, the ability of the Company to suc
ket its product, and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission.
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Quarterly Trends.
The Company expects revenues to grow significantly in the third and fourth
quarters of calendar year 1999, and continue growing rapidly in the year
2000, after which the Company expects revenues to assume a steadier, slower
growth. The security industry has traditionally been served with CCTV
analog systems, which are inferior in terms of performance and cost to a
digital system like SecureView. As a result, many large security system
integrators, commercial and government parties are currently looking f
stems that provide remote video access, programmable, unattended "smart"
security features and enhanced video storage. Accordingly, the Company
believes that there is an immediate market opportunity for the SecureView
product line and the Company is well positioned to take advantage of that
market opportunity. The Company believes that much of its sales growth
will be driven by significant revenue growth in the SecureView line of
products. In addition, the Company expects to see sales revenue growth
in operations in Eastern Tech, as Eastern Tech hires additional personnel
to manage production and quality control thereby freeing up resources to
focus more on sales. We believe that there is a significant market need for
design-engineering services, especially when such services can be combined
with manufacturing services. Many of Eastern Tech's manufacturing
competitors offer engineering services. Eastern Tech will be moving into
design engineering work, and the Company expects the addition of this a
is adice offering in Eastern Tech will boost sales revenue.
Liquidity and Capital Resources
Since the Company's inception, the Company has funded its cash requirements
through equity transactions. The Company used the funds from those
transactions to fund investments in, and acquisition of, technology,
assets and companies, to provide working capital and for general corporate
purposes, including paying expenses the Company incurred in connection with
the development of the SecureView line of prois ad
ice offering in Eastern Tech will boost sales revenue.
Liquidity and Capital Resources
Since the Company's inception, the Company has funded its cash requirements
through equity transactions. The Company used the funds from those
transactions to fund investments in, and acquisition of, technology,
assets and companies, to provide working capital and for general corporate
purposes, including paying expenses the Company incurred in connection with
the development of the SecureView line of products. As of the year ended
December 31, 1998, the Company had current assets of $275,070.00, and total
liabilities of approximately $270,986.00, resulting in a stock equity of
$4,084.00. Losses have been funded in part by small loans from two
shareholders totaling $125,000.00 and a $75,000.00 revolving bank line
of credit. Following the acquisition of RealView, beginning in November
of securities under Regulation D, Rule 504 promulgated by the U.S.
Securities and Exchange Commission. This offering was fully subscribed
and closed on February 8, 1999, and the Company sold 666,667 shares for
a consideration of $1,000,000.00, which provided a significant source of
operating capital and capital used to acquire and consolidate RealView,
Xyros and Eastern Tech. During January and February 1999, the Company
received most of the proceeds of the Rule 504 offering. As a result, as
of March 31
sets of $859,898.00 The Company's total liabilities as of that date
were $272,069.00, and the stockholders equity was $587,829.00. The
Company's current assets at March 31, 1999, totaled $665,357.00. On
June 30, 1999 the Company had total assets of $1,528,233. The Company's
total liabilities on that date were $475,559.00 and shareholders equity
was $1,057,674.00.
Year 2000 Compliance
The Company is reviewing its computer systems and operations, as well as
the components for its systems, to determine the extent to which the business
will be vulnerable to potential errors and failures as a result if the "Year
2000" problem. The year 2000 problem results from the use of computer
programs which were written using only two digits (rather than four digits)
to define applicable years. On January 1, 2000, any clock or date recording
mechanism, including date sensitive software which uses onl
to represent the year, could recognize a date using "00" as the year
"1900", rather than the year "2000". This could result in system failures
or miscalculations, causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices,
provide
- -12-
services or engage in similar activities. These failures, miscalculations
and disruptions could have a
material adverse effect on our business, operations, and financial
conditions. The Company's software and hardware components in its
systems are Y2K compliant, and the Company is taking steps to make
sure its developed systems are Y2K compliant and the system components
are Y2K compliant.
The Company has made inquiries to its outside suppliers to ascertain if
such suppliers are Y2K compliant. At this time, management is satisfied
that such suppliers have made or are making appropriate examinations and
necessary upgrades to insure Y2K readiness. However, the Company does not
depend exclusively on one supplier, and, therefore, does not anticipate
any significant interruption in materials and supplies in the event that
any particular supplier experiences Y2K problems. Although the Company d
ipate any material adverse effects, it cannot guarantee that no disruption
in products or services will occur if multiple suppliers experience Y2K
problems.
The Company has not experienced and does not anticipate any extraordinary
expenses related to Y2K. The Company will continue to monitor its internal
systems and keep in close touch with its outside suppliers to insure that
its operations are not materially affected by Y2K.
Currently, the Company does not have contingency plans in place to deal
with unanticipated Y2K disruptions if they occur. Such unanticipated
disruptions could have an adverse effect on the Company's operation.
Results of Operations
A summary of our audited balance sheets for the years ended
December 31, 1997, and 1998, and the interim statements for
June 30, 1999, are as follows:
Ended Years ended December 31, Interim Period
1997 1998 June 30, 1999
Cash/Cash Equivalents $ 7 $169,899 $ 44,265
Current Assets 3,097 191,735 533,618
Total Assets $62,457 $275,070 1,528,233
Current Liabilities $24,685 $270,986 $ 475,559
Total Liabilities 24,685 270,986 475,559
Total Stockholder $37,772 $ 4,084 $1,052,674
Equity
Total Liabilities $62,457 275,070 1,528,233
& Stockholders Equity
- -13-
Summary Revenue Statement
The following summarizes the results of the Company's operations for
the years ended
December 31,1997, and 1998, and 1999, for the interim period ended
June 30, 1999.
CONSOLIDATED STATEMENTS OF OPERATIONS
Cumulative from
from
Six Month Ended Years Ended January 26, 1989
June 30, June 30, December 31 (Inception) to
1999 1998 1998 1997 June 30, 1999
(Unaudited) (Unaudited)
REVENUE:
Sales and Other Income$ 41,260 $ 16,953 $ 31,438 $ - $ 91,815
Cost of Goods Sold 12,869 $ 3,887 20,891 - 34,966
GROSS PROFIT ON SALES 28,391 13,066 10,547 - 126,781
OPERATING EXPENSES:
Advertising and promotion 8,440 2,819 3,959 1,222 26,334
Amortization 4,128 - - - 4,128
Automobile 1,221 - - - 2,949
Commissions 1,000 - - - 1,000
Depreciation 6,624 - - 4,526 28,204
Dues and subscriptions 319 - 250 - 569
Insurance 6,195 488 1,268 - 7,463
Interest 11,990 1,617 10,054 233 22,327
Investor relations 2,811 - - - 2,811
Miscellaneous expense 1,660 197 1,343 - 29,216
Office expenses 22,290 2,638 106,375 2,264 157,298
Postage and delivery 2,878 226 - - 2,878
Printing and reproduction21,637 - - - 21,637
Professional fees 136,160 9,901 10,819 5,054 196,290
Rent 22,900 14,746 52,204 8,375 90,297
Repairs and maintenance 3,523 - - - 7,093
Research and development 2,698 2,538 - - 2,698
Salaries and benefits 431,457 31,849 - - 431,457
Taxes 808 3,065 - - 808
Telephone 6,800 582 - - 6,800
Travel Expenses 37,963 981 13,456 720 69,324
Utilities 6,997 - 4,246 2,443 18,447
Total expenses 740,499 71,692 254,104 24,837 434,944
NET LOSS $ (712,108) $(58,626) $(243,557) $(24,837)$(1,118,593))
LOSS PER SHARE:
Basic (.14) (.01) (.06) (.01)
Diluted (.14) (.01) (.06) (01)
- -14-
Plan of Operation
We have devoted most of our resources since inception of operations to the
research and development of the SecureView line of products, the development
of marketing and sales infrastructure,
the development of production capability and the development of brand
awareness of "SecureView." Although the Company has been selling products
since March of 1999, the Company is still developing these products and has
generated limited revenues. As of June 30, 1999, the Company had an
accumulated earnings deficit of approximately $1,118,593. The Company
expects the operating losses to continue until the Company develops a
sufficient network of reseller, OEMs and strategic partners generating
sales reve
our operating expenses.
The Company is currently conducting an offering under Rule 505 and will use
the cash raised from the sale of securities in the offering, to bring the
SecureView-4 to market, to continue the Company's product development
efforts, to expand the Company's sales, marketing and promotional activities
for the SecureView line of products, and to increase the Company's
engineering, production management, quality control, and customer support
staff. The Company operates in a very competitive industry that requires
ge amounts of capital to develop and promote its products. Many of the
Company's competitors have significantly greater capital resources. The
Company believes that it will be essential to continue to raise additional
capital to compete in this industry.
The Company needs to raise external capital in the future. The amount of
capital the Company will need to raise in the future, will depend upon many
factors, including, but not limited to, the rate of sales growth and market
acceptance of the Company's product lines, the amount and timing of our
necessary research and development expenditures, the amount and timing of
our expenditures to sufficiently market and promote the Company's products
and the amount and timing of any accessory product introductions.
to accessing the public equity markets, the Company will pursue bank
credit lines and equipment lease lines for certain capital expenditures.
However, there can be no assurance that the Company will be able to access
the capital it needs. The Company currently estimates it will need between
$7,000,000 - $12,000,000 million to fully develop all of its products and
launch its expanded business operations and in accordance with its current
business plan. The actual amount of capital the Company will need t
depend on a number of factors, including (i) the Company's ability to
negotiate favorable prices for purchases of necessary parts and assemblies,
(ii) the number and composition of its resellers, OEMs and strategic
partners, (iii) the prices the Company can obtain for its products and
services and costs of servicing its products and delivering its services,
(iv) changes in technology. In addition, the Company's cost and revenues
could vary from the amounts the Company expects or budgets, possibly by a
mat
and those variations are likely to affect how much additional financing
the Company will need for its operations. Accordingly, there can be no
assurance the Company's actual financial needs will not exceed the amounts
available to them. To the extent that the Company acquires the amounts
necessary to fund the business plan through the issuance of equity
securities, current shareholders may experience dilution in the value
per share of their equity securities. The acquisition of funding through
the issua
ould result in a substantial portion of the Company's cash flows from
operations being dedicated to the payment of principal and interest on
that indebtedness, and could render the Company more vulnerable to
competitive and economic downturns.
ITEM 3. Description of Property
The Company leases an executive office at 925 W. Kenyon Street, Suite 15,
Englewood, CO 80110 and the Company also leases engineering and
manufacturing facilities at 9693 Gerwig Lane, Suite O, Columbia, MD 21046.
The Company does not have current plans or policies to invest in real
estate.
- -15-
ITEM 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the best of the Company's
knowledge, as of June 31, 1999, with respect to each person known by the
Company to own beneficially more than 5% of the outstanding Common Stock,
each director and all directors and officers as a group.
Name and Position Title of Amount of Percentage
Address Class Shares
(1) Gunther Than President/CEO, Common 1,271,800 22.7%
(2) 28 Dekker St. Director-View Systems
Golden, CO 80401VP, Director-Eastern Tech
Andrew L. Jiranek Vice President, Common 100,000 1.8%
10426 Falls Road Secretary, General Counsel-View Systems
Cutherville, MD 21093 Vice President-Eastern Tech
David Bruggeman Vice President- Common 87,000 1.5%
6529 Quiet Hours #103 Xyros Systems, Inc.
Columbia, MD 21045 Vice President-Eastern Tech
Lawrence Stated repayment of the LBO debt in less than five years.
With hands-on experience in bringing projects from R&D through prototype
and on to final delivery, Mr. Than has been instrumental in developing
ViewSystems as a public company. Mr. Than is leading a full bore campaign
to build the company through acquisition of businesses that will enhance
View Systems product line and showcase the Company's innovative technology.
Andrew L. Jiranek, VP, Secretary, General Counsel-View Systems; VP-Eastern
Tech
Mr. Jiranek has extensive experience in working with emerging
companies in the high technology industry and has long counseled
on the business issues commonly confronting these companies. Mr. Jiranek
will assist the Company with corporate governance, securities compliance,
mergers and acquisition, strategic partnering, business development,
licensing and other contractual issues, including bid proposal, and
employment matters. He will also represent management on the ISO
certification, quality control product of Eastern Tech. He is a
graduate of William and Mary Law School and received an Economics
Degree from Princeton University.
Bruce Lesniak, Director of Corporate Development- View Systems
Mr. Lesniak has been active in the security industry for over 15 years.
The last 14 years were spent Hyattsville, MD 20784
David C. Bruggeman Vice President-Xyros
6529 Quiet Hours #103 Vice President-Eastern Tech
Columbia, MD 21045
Gunther Than, President, CEO, Director-View Systems; director, VP-Eastern
TechA graduate of the University of Wisconsin, with a dual degree in
Engineering Physics, and Applied Mathematics, Mr. Than has developed a
reputation for profitable solutions to broad based business problems,
using the latest computer technology. As a vice president of Patterson
Dental Corporation (the largest dental supply house in the world), he was
instrumental in securing $48 million in a leverage buy-out purchase of the
company from Beatrice foods. The system changes engineered by Mr. Than at
Patterstated repayment of the LBO debt in less than five years. With
hands-on experience in bringing projects from R&D through prototype and
on to final delivery, Mr. Than has been instrumental in developing
ViewSystems as a public company. Mr. Than is leading a full bore campaign
to build the company through acquisition of businesses that will enhance
View Systems product line and showcase the Company's innovative technology.
Andrew L. Jiranek, VP, Secretary, General Counsel-View Systems;
VP-Eastern Tech
nal corporate conglomerate and vice president of product management for a
large publicly traded video teleconferencing company.
Lawrence Seiler, President- Eastern Tech
Mr. Seiler has successfully operated Eastern Tech for over 15 years, during
which time Eastern Tech has had annual revenues of between $800,000 and
$3,000,000. While at Eastern Tech, Mr. Seiler has provided senior
management to a work force of between 20 and 40 persons. Prior to founding
Eastern Tech, Mr. Seiler held management positions at MACOM
Telecommunications Co., Litton Co., Amecon Division and Singer Company,
Kearlott Aerospace Marine Division. Mr. Seiler received an Electrical
Engineering degree
sey Institution of Technology in 1978 and a Master of Science (Managerial
Option) from John Hopkins University in 1984.
John Curran, Vice President - Eastern Tech.
Mr. Curran has thirty years of diversified Electronic and Electromechanical
Manufacturing Engineering experience. Mr. Curran specializes in Start-up
Manufacturing Operations, Productivity, and Quality Assessments. Mr. Curran
formerly held management position at Ant Telecommunications, Inc., as a
Production Manager, Gould, Inc., as the Director of Operations, and Novatak,
Inc., as Director of Manufacturing.
Dr. David Barbara, Director-View Systems
Dr. Barbara had held a variety of executive positions with hospitals in
Lafayette, Indiana and has been a surgeon with a 120-physician
multi-specialty clinic since 1986. He holds a BA from Xavier University
and MD from the University of Kentucky, and is a board-certified surgeon.
Dr. Michael L. Bagnoli, Director-View Systems
Dr. Bagnoli holds (dual/joint) degrees as a medical doctor and a dental
specialist. Since 1988 he has practiced dentistry in the specialty area
of oral and masiofacial surgery. Dr. Bagnoli was founder, CEO and president
of a successful medical products company, Biotek, Inc., which sold to a
larger interest in 1994. His combination of professional training and
success in entrepreneurial business brings unique and valuable strength
to View.
Dr. Martin Maassen, Director-View Systems
Dr. Maassen is a board-certified physician in Internal Medicine and
Emergency Medicine and has served as a Staff Physician in the Emergency
Departments of Jackson County, Deaconess, Union and St. Elizabeth hospitals
in Indiana since 1977. In addition to practicing medicine he maintains an
expertise in computer technologies. He has a Bachelors and a MD degree
from Indiana University.
- -18-
ITEM 6. Executive Compensation
Gunther Than, President, CEO, Director
Mr. Than has an executive employment agreement for $6000.00 per month and
300,000 shares of the issuers common stock in exchange for a restrictive
covenant-not-to-compete or solicit Company employees. Said employment
agreement will continue in effect unless terminated by either Mr. Than
or the Company on a sixty-day notice. Mr. Than also participates in the
Company's restricted share plan for 300,000 shares.
Andrew L. Jiranek, Secretary, Vice President, Corporate Counsel
Mr. Jiranek has an employment agreement for $5000.00 per month. Said
agreement may be canceled on sixty days notice by either party. Mr.
Jiranek has also participated in the Company's restricted share plan
for 100,000 shares.
Bruce Lesniak, Director of Corporate Development
Mr. Lesniak has an engagement agreement for $4,000.00 per month, plus he
receives options to purchase 4,000 shares of the Company's stock at a
nominal price. Mr.Lesniak has also participated in the Company's
restricted share plan for 140,000 shares.
Lawrence Seiler, President - Eastern Tech Manufacturing Corp.
Mr. Seiler has an employment agreement with Eastern Tech Manufacturing
Corp., with compensation set at $5,000.00 per month. Mr. Seiler also has
a sales representative contract continuing in full force and effect until
terminated on thirty days notice by either party. Mr. Seiler also receives
sales commissions equal to 5% of the sales he procures for Eastern
Technology and View Systems.
David C. Bruggeman, VP - Xyros Systems, Inc.; VP-Eastern Tech
Mr. Bruggeman has an employment agreement with View Systems, Inc.,
whereby he receives $6,000.00 per month, which agreement may be canceled
by either party on thirty days notice. Mr. Bruggeman has also participated
in the Company's restricted share plan for 48,000 shares.
John Curran, VP-Eastern Tech Manufacturing Corp.
Mr. Curran has an employment agreement with Eastern Tech Manufacturing
Corp. whereby he receives $5000.00 per month, which agreement may be
canceled by either party on thirty days notice.
Martin Maassen, Director-View Systems
Mr. Maassen received $21,000.00 in consulting fees from View Systems
prior to becoming a Director of View Systems. Currently, he does not
receive remuneration for his service as a Director of View Systems.
There are no annuity, pension, or retirement benefits proposed to pay
officers, directors, or employees of the Corporation in the event of
retirement pursuant to any presently existing plan provided or contributed
to by the Corporation or any of its subsidiaries.
No remuneration other than that reported in this paragraph is proposed.
to be in the future directly or indirectly by the corporation to any
officer or director under any plan which is presently existing.
- -19-
ITEM 7. Certain Relationships and Related Transactions
Gunther Than, Director, President, and CEO of View Systems; Vice President
and Director of Eastern Tech, acquired 1,046,800 shares of common stock as
a result of the Company's acquisition of RealView Systems, Inc. He also
acquired 300,000 shares under the View Systems,
Inc., 1999 restricted share plan and 300,000 shares in exchange for a
restrictive covenant-not-to-compete and a non-solicit employees and
customers. Mr. Than has also received loans from View Systems totaling
$67,719.35, as of March 31, 1999. On May 27, 1999, the Company redeemed
25,000 of its shares held by Mr. Than at a price of $2.00 per share.
Andrew L. Jiranek, Vice President, Secretary and General Counsel of View
Systems; Vice President of Eastern Tech, received 100,000 shares of common
stock under the Company's restricted share plan. Prior to becoming
employees by View Systems, Mr. Jiranek had received consulting fees of
$5000.00 from View Systems.
David Bruggeman, Vice President of Xyros Systems and Vice President of
Eastern Tech, is the beneficiary under the Company's restricted share
plan of 48,000 shares of the Company's common stock. He also received
39,000 shares in the Xyros share exchange.
Bruce Lesniak, Director of Corporate Development, has received 140,000
shares under the Company's restricted share plan.
Thomas Weiss, employee, is the beneficiary of 3,250 shares under the
Company's restricted share plan. He also received 3,000 shares under
the Xyros share exchange.
Martin Maassen, Director, received $21,000.00 in consulting fees from
View Systems prior to becoming a Director of View Systems.
Vincent C. DeCampo, employee, is the beneficiary of 3,000 shares under
the Company's restricted share plan. He also received 5,250 shares in
the Xyros share exchange.
Linda Than, the wife of Gunther Than, a non-salaried employee for the
Company, is the beneficiary of 100,000 shares under the Company's
restricted share plan and was the recipient of 66,700 shares of the
issuers common stock in the RealView share exchange.
Lawrence Seiler, President of Eastern Tech, has acquired 250,000 shares
through the Company's acquisition of all of his shares in Eastern Tech
and subsequently, Larry Seiler acquired additional 50,000 shares. Mr.
Seiler has also accepted 170,000 shares in exchange for the Company's
cancellation of indebtedness totaling $388,123.51.
View Technologies, Inc., a privately held Colorado corporation founded
in 1994, is a related company. It was founded and organized by Gunther
Than, President, Chief Executive Officer and Board Chairman of View
Systems, Inc. View Technologies produces software and hardware products
used in computer networks, which transmi 31, 1999, View Technol
13,938 in a loan payable to View Systems. We expect View Technologies will
either be a significant customer for the Company or the subject of a
business combination with the Company. We expect that View Technologies
will license hardware designs from the Company and use the Company for
the manufacturing of its product.
ITEM 8. Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $.001 per share, of which 4,166,667, 4,816,667, and 5,595,667 shares
were issued and outstanding as of December 31, 1998 March 31, 1999, and
June 30, 1999, respectively. All shares of Common Stock have equal rights
and privileges with respect to voting, liquidation and dividend rights.
All shares of Common Stock entitle the holder thereof to (i) one non-
cumulative vote for each share held of record on all matters submitted to
e stockh however, currently on
ely 50 copies of this software have been licensed and are in use.
View Technologies, has developed its own software for compressing digital
files containing sound and image data. View Technologies, inc. has licensed
this software to RealView Systems; however, it is believed that this
software will be unsuitable for integration into View Systems products
because it has been optimized for medical imagery. Therefore, View
Systems, is developing, and plans to license, its own proprietary
compression formulations. View Technologies and View Systems share
human resources and is the President and Chief Executive Officer and
Andrew Jiranek is Vice President of both companies. Mr. Than and his
wife are majority shareholders of View Technologies. The companies
account for any and all resources that are jointly used by both companies.
View Technologies operates out of space adjoining the space occupied by
View Systems in Columbia, Maryland. From time to time, as is necessary,
View Systems and /or View Technologies will lean each other monies. As of
March 31, 1999,
View Technol
March 31, 1998 2 1/8 2
March 31, 1999 2 7/16 2 3/16
June 30, 1999 3 2 3/4
There are ten broker-dealers listed as traders of the Company stock.
Knight Wein
Hill Thompson Herzog
Sharp Security Paragon
Wilson Davis GGRC
Myerson Nash Weiss
These quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions
The Company's shares will be subject to the provisions of Section 15(g)
and Rule 15g-9 of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), commonly referred to as the
"penny stock" rule. Section 15(g) sets forth-certain requirements
for transactions in penny stocks and title 15g-9(d)(1) incorporates
the definition of penny stock that is found in Rule 3a51-1 of the
Exchange Act.
The Commission generally defines penny stock to be any equity security
that has a market price less the $5.00 per share, subject to certain
exceptions. Rule 3a51-1 provides that any equity security is considered
to be penny stock unless that security is: registered and traded on a
national securities exchange meeting specified criteria set by the
Commission; authorized for quotation from the NASDAQ stock Market;
issued by a registered investment company; excluded from the definition
on the basis of
price (at least $5.00 per share) or the issuer's net tangible assets;
or exempted from the definition by the
Commission. If the Company's shares are deemed to be a penny stock,
trading in the shares will be subject to additional sales practice
requirements on broker-dealers who sell penny stocks to persons other
than established customers and accredited investors, who generally are
persons with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of such security
and must have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the first
transaction, of a risk disclosure document relating to the penny stock.
A broker-dealer also must disclose the commissions payable to both the
broker-d
registered representative, and current quotations for the securities.
Finally, monthly statements must be sent disclosing recent price
information for the penny stocks held in account and information on
- -22-
the limited market in penny stocks. Consequently, these rules may restrict
the ability of broker-dealers to trade and/or maintain a market in the
Company's Common Stock and may affect the ability to shareholders to sell
their shares.
Dividend Policy
The Company has not declared or paid cash dividends or made distributions
in the past, and the Company does not anticipate that it will pay cash
dividends or make distributions in the foreseeable future. The Company
currently intends to retain and invest future earnings to finance its
operations.
ITEM 2. Legal Proceedings
Certain assets of the Company's wholly owned subsidiary, Eastern Tech, are
the subjects of civil asset forfeiture initiated by the Federal Bureau of
Investigation, Washington Field Office (the "FBI"). On March 12, 1999, the
FBI seized one corporate bank account holding $63,572.21 titled on the name
of Eastern Tech and a 1996 Chevrolet Tahoe and bank account holding
$43,321.49 titled in the name of Larry Seiler. Both Mr. Seiler and Eastern
Tech are contesting the asset forfeiture action and the matter has
d to the U.S. Attorney's Office for the District of Columbia.
The U.S. Attorney's Office for the District of Columbia and the FBI are
investigating Eastern Tech and Mr. Seiler in connection with certain
subcontracts Eastern Tech performed in 1996 and 1997 for Boeing, Inc.,
which in turn was performing contracts with the National Space & Aerospace
Administration ("NASA"). In seizing the assets, the FBI has alleged that
Eastern Tech and Mr. Seiler paid kickbacks in connection with the Boeing
contracts and laundered monies paid from these contracts. Mr. Seiler and
Eastern Tech Manufacturing vigorously contest these allegations and are
prepared to take whatever actions are necessary to recover the seized
assets. No civil or criminal proceedings have been initiated with regard
to this on-going investigation.
The Company's officers and directors are aware of no other threatened or
pending litigation, which would have a material, adverse effect on the
Company.
ITEM 3. Changes in and Disagreements with Accountants
There have been no changes in or disagreements with accountants.
ITEM 4. Recent Sales of Unregistered Securities
On October 6, 1998, 2,000,000 shares of unregistered stock were issued in
conjunction with the acquisition of RealView Systems, Inc., a Colorado
corporation, for all the outstanding stock of RealView, on an exchange
of share basis.
From November 1998 to February 8, 1999, 666,667 shares were sold to the
public pursuant to Regulation D, Rule 504 of the Securities Act of 1933,
as amended, for $1,000,000.
On February 25, 1999, 150,000 shares of unregistered stock were exchanged
for 100% of the stock of Xyros Systems, Inc., a Maryland corporation, on
a share exchange.
- -23-
On May 25, 1999, 250,000 shares of unregistered stock were issued in
conjunction with the acquisition of Eastern Tech Manufacturing, Corp.,
a Maryland corporation, for all the outstanding stock
of Eastern Tech, on an exchange of share basis. On July 29, 1999, the
Company issued 170,000 shares to Larry Seiler, President of Eastern Tech,
in exchange for cancellation of payments View Systems or its wholly owned
subsidiary Eastern Tech, was obligated to make to or for the benefit of Mr.
Seiler.
A total share issuance of 706,000 shares to employees as compensation
under the View Systems, Inc., 1999 restricted share plan.
ITEM 5. Indemnification of Directors and Officers
The By-laws of the Company provide for indemnification of the Company's
Officers and Directors against liabilities arising due to certain acts
performed on behalf of the Company. Because indemnification for liabilities
arising under the Securities Act may not be permitted to Directors,
Officers or persons controlling the Company, pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the
Securities Commission such indemnification is against public policy as
expressed in
is therefore unforceable.
Transfer Agent
The Company has designated Interwest Transfer Company, Inc., 1981 East
4800 South, Salt Lake City, Utah 84117.
- -24-
PART F / S
The Company's financial statements for the fiscal year ended December 31,
1997 and 1998 and March 31, 1999 have been examined to the extent indicated
in their reports by Segman & Company, independent certified public
accountants, and have been prepared in accordance with generally accepted
accounting principles and pursuant to Regulation S-B as promulgated by the
Securities and Exchange Commission and are included herein in response to
Item 15 of this Form 10-SB.
- -25-
PART III
ITEM 1. Index to Exhibits
The following exhibits are filed with this Registration Statement.
A. Articles of Incorporation, dated 1-26-1989, and
Amendments to Articles of Incorporation
1. Articles of Incorporation
2. Name change, Beneficial Investment Group, Inc. to BIGI, Inc. 7-21-1998
3. Name change, BIGI, Inc. to View Systems, Inc. 9-22-7998
B. By-laws -Views Systems, Inc.
C. Offering Circular - ViewSystem, Inc. 11-16-98
1. Form D
D. Acquisition Agreements
1. ViewSystems, Inc. acquisition of RealView Systems, Inc.
2. ViewSystems, Inc. acquisition of Xyros System, Inc.
3. ViewSystems, Inc. acquisition of Eastern Technology
Manufacturing Corporation.
E. Financial Statements
1. Consolidated Audit Statements
December 31, 1998, 1997 & unaudited three months ended March 31, 1999
2. Consolidated for Years ended
December 31, 1998 and 1997
3. Statements December 31, 1997
4. Statements December 31, 1996, 1997, and July 22, 1998
F. Compensation Agreements
1. Gunther Than- View Systems, Inc.
2. Andrew L. Jiranek- View Systems, Inc.
3. David C. Bruggeman- View Systems, Inc.
4. A. Lawrence Seiler- View Systems, Inc.
5. B. Lawrence Seiler- Eastern Tech
G. View Systems, Inc. 1999 Restricted Share Plan
H. Restricted Share Agreements
1. Gunther Than
2. Andrew L. Jiranek
3. Vincent DeCampo
4. Tom Weiss
5. David C. Bruggeman
6. Linda Than
- -EX-1-
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly organized.
VIEW SYSTEMS, INC.
(Registrant)
Date: _______________ 1999 By:____________________________________
Gunther Than, President
By:____________________________________
Andrew Jiranek, Vice President, Secretary &
General Counsel
S-2
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