UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
|
[X]
|
QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended September
30, 2020
|
[ ]
|
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ___________ to _________.
Commission file
number 000-25753
VISIUM TECHNOLOGIES, INC.
(Exact
name of registrant as specified in its charter)
|
Florida
|
|
87-0449667
|
|
(State
of Incorporation)
|
|
(IRS
Employer Identification No.)
|
4094
MAJESTIC LANE, SUITE 360
FAIRFAX, VA 22033
(Address of
principal executive offices)
(703)
273-0383
Registrant’s
telephone number, including area code:
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class
|
|
Trading
Symbol(s)
|
|
Name
of each exchange on which registered
|
|
Common
Stock, $0.0001 Par Value
|
|
VISM
|
|
OTC
Pink
|
Indicate by check
mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes [X]
No [ ]
Indicate by check
mark whether the registrant has submitted electronically every
Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required
to submit such files). Yes [X] No [ ]
Indicate by check
mark whether the registrant is large accelerated filer, an
accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See definition of “large
accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act:
|
Large
accelerated filer
|
☐
|
Accelerated
filer
|
☐
|
|
Non-accelerated
filer
|
☒
|
Smaller
Reporting Company
|
☒
|
|
Emerging growth
company
|
☐
|
|
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ]
No [X]
The
number of shares outstanding of the registrant’s Common Stock,
$0.0001 par value per share, as of November 12, 2020, was
2,610,799,157.
When
used in this quarterly report, the terms “Visium,” “the Company,”
“we,” “our,” and “us” refer to Visium Technologies, Inc., a Florida
corporation.
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
This
quarterly report on Form 10-Q contains certain forward-looking
statements. Forward-looking statements may include our statements
regarding our goals, beliefs, strategies, objectives, plans,
including product and service developments, future financial
conditions, results or projections or current expectations. In some
cases, you can identify forward-looking statements by terminology
such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “predict,” “potential” or “continue,” the
negative of such terms, or other comparable terminology. These
statements are subject to known and unknown risks, uncertainties,
assumptions and other factors that may cause actual results to be
materially different from those contemplated by the forward-looking
statements. These factors include, but are not limited to, our
ability to implement our strategic initiatives, economic, political
and market conditions and fluctuations, government and industry
regulation, interest rate risk, U.S. and global competition, and
other factors. Most of these factors are difficult to predict
accurately and are generally beyond our control. You should
consider the areas of risk described in connection with any
forward-looking statements that may be made herein. The business
and operations of Visium Technologies, Inc. are subject to
substantial risks, which increase the uncertainty inherent in the
forward-looking statements contained in this report. Except as
required by law, we undertake no obligation to release publicly the
result of any revision to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events. Further
information on potential factors that could affect our business is
described under “Item 1A. Risk Factors” in our Form 10-K as filed
with the Securities and Exchange Commission, or the SEC, on
September 27, 2020. Readers are also urged to carefully review and
consider the various disclosures we have made in this report and in
our registration statement on Form 10-K.
VISIUM
TECHNOLOGIES, INC.
INDEX
|
PART I
- FINANCIAL INFORMATION
|
3
|
|
Item 1.
Financial Statements
|
3
|
|
Consolidated
Balance Sheets – September 30, 2020 (unaudited) and June 30,
2020
|
3
|
|
Consolidated
Statements of Operations - Three Months ended September 30, 2020
and 2019 (unaudited)
|
4
|
|
Consolidated
Statements of Changes in Stockholders’ Deficit (unaudited) - Three
Months ended September 30, 2020 and 2019
|
5
|
|
Consolidated
Statements of Cash Flows - Three Months Ended September 30, 2020
and 2019 (unaudited)
|
7
|
|
Notes
to Unaudited Consolidated Financial Statements – September 30,
2020
|
8
|
|
Item 2.
Management’s Discussion and Analysis and Results of
Operations
|
20
|
|
Item 3.
Quantitative and Qualitative Disclosures About Market
Risk
|
24
|
|
Item 4.
Controls and Procedures
|
24
|
|
PART II
- OTHER INFORMATION
|
25
|
|
Item 1.
Legal Proceedings.
|
25
|
|
Item
1A. Risk Factors.
|
25
|
|
Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds.
|
25
|
|
Item 3.
Defaults Upon Senior Securities.
|
25
|
|
Item 4.
Mine Safety Disclosures.
|
25
|
|
Item 5.
Other Information.
|
25
|
|
Item 6.
Exhibits
|
25
|
|
SIGNATURES
|
26
|
PART
I - FINANCIAL INFORMATION
Item 1.
Financial Statements
VISIUM
TECHNOLOGIES, INC.
CONSOLIDATED
BALANCE SHEETS
|
|
|
September
30, 2020
|
|
|
June
30, 2020 (1)
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,936
|
|
|
$
|
30,251
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
1,936
|
|
|
|
30,251
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
1,936
|
|
|
$
|
30,251
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued expenses
|
|
$
|
438,234
|
|
|
$
|
333,805
|
|
|
Accrued
compensation
|
|
|
736,529
|
|
|
|
652,529
|
|
|
Accrued
interest
|
|
|
701,471
|
|
|
|
677,857
|
|
|
Convertible notes
payable to ASC Recap LLC
|
|
|
147,965
|
|
|
|
147,965
|
|
|
Convertible notes
payable
|
|
|
782,490
|
|
|
|
852,962
|
|
|
Notes
payable
|
|
|
205,000
|
|
|
|
205,000
|
|
|
Derivative
liabilities
|
|
|
314,221
|
|
|
|
438,553
|
|
|
Due to
officers
|
|
|
96,840
|
|
|
|
102,340
|
|
|
Total
current liabilities
|
|
|
3,422,750
|
|
|
|
3,411,011
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies (Note 9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 100,000,000 shares authorized
|
|
|
|
|
|
|
|
|
|
Series
A (65,000,000 shares designated, 13,992,340 shares issued and
outstanding as of September 30, 2020 and June 30,
2020)
|
|
|
13,992
|
|
|
|
13,992
|
|
|
Series
B (30,000,000 shares designated, 1,327,640 shares issued and
outstanding as of September 30, 2020 and June 30,
2020)
|
|
|
1,328
|
|
|
|
1,328
|
|
|
Series
AA Convertible Stock ($0.001 par value; 1 share authorized, 1 share
issued and outstanding as of September 30, 2020 and June 30,
2020)
|
|
|
0
|
|
|
|
0
|
|
|
Common
stock, $0.0001 par value, 10,000,000,000 shares authorized:
2,026,742,014 shares issued and 2,026,275,356 shares outstanding as
of September 30, 2020 and 1,544,793,446 shares issued and
1,544,126,787 outstanding at June 30, 2020 (See Note
6)
|
|
|
202,628
|
|
|
|
154,413
|
|
|
Additional paid in
capital
|
|
|
44,698,489
|
|
|
|
44,441,085
|
|
|
Accumulated
deficit
|
|
|
(48,337,251
|
)
|
|
|
(47,991,578
|
)
|
|
Total
stockholders’ deficit
|
|
|
(3,420,814
|
)
|
|
|
(3,380,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit
|
|
$
|
1,936
|
|
|
$
|
30,251
|
|
(1)
Derived from audited financial statements
SEE
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
VISIUM
TECHNOLOGIES, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three
Months Ended September 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Net
revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general
and administrative
|
|
|
193,196
|
|
|
|
199,058
|
|
|
Development
expense
|
|
|
95,000
|
|
|
|
35,500
|
|
|
Total
Operating Expenses
|
|
|
288,196
|
|
|
|
234,558
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from Operations
|
|
|
(288,196
|
)
|
|
|
(234,558
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expenses):
|
|
|
|
|
|
|
|
|
|
Gain on
change in fair value of derivative liabilities
|
|
|
124,332
|
|
|
|
278,012
|
|
|
Interest
expense
|
|
|
(26,908
|
)
|
|
|
(100,481
|
)
|
|
Loss on
extinguishment of debt
|
|
|
(154,901
|
)
|
|
|
(40,414
|
)
|
|
Total
other income (expenses)
|
|
|
(57,477
|
|
|
|
137,117
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(345,673
|
)
|
|
$
|
(97,441
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding - basic and diluted
|
|
|
1,832,561,950
|
|
|
|
46,364,135
|
|
SEE
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
VISIUM
TECHNOLOGIES, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2020
(UNAUDITED)
|
|
|
Preferred
Stock - Series A
$0.001
Par Value
|
|
|
PreferredStock
- Series B
$0.001
Par Value
|
|
|
Preferred
Stock -Series AA
$0.001
Par Value
|
|
|
Common
Stock
$0.0001
Par Value
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
Balance
at June 30, 2020
|
|
|
13,992,340
|
|
|
$
|
13,992
|
|
|
|
1,327,640
|
|
|
$
|
1,328
|
|
|
|
1
|
|
|
$
|
0
|
|
|
|
1,544,126,787
|
|
|
$
|
154,413
|
|
|
$
|
44,441,085
|
|
|
$
|
(47,991,578
|
)
|
|
$
|
(3,380,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued as compensation to directors and officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000,000
|
|
|
|
9,000
|
|
|
|
36,000
|
|
|
|
|
|
|
|
45,000
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,200,001
|
|
|
|
3,020
|
|
|
|
23,980
|
|
|
|
|
|
|
|
27,000
|
|
|
Shares
issued for conversion of notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
361,948,560
|
|
|
|
36,195
|
|
|
|
197,424
|
|
|
|
|
|
|
|
233,619
|
|
|
Net
loss for the three months ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(345,673
|
)
|
|
|
(345,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2020
|
|
|
13,992,340
|
|
|
$
|
13,992
|
|
|
|
1,327,640
|
|
|
$
|
1,328
|
|
|
|
1
|
|
|
$
|
0
|
|
|
|
2,026,275,348
|
|
|
$
|
202,628
|
|
|
$
|
44,698,489
|
|
|
$
|
(48,337,251
|
)
|
|
$
|
(3,420,814
|
)
|
SEE
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
VISIUM
TECHNOLOGIES, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2019
(UNAUDITED)
|
|
|
Preferred
Stock -Series A $0.001 Par Value
|
|
|
Preferred
Stock -Series B $0.001 Par Value
|
|
|
Preferred
Stock -Series AA $0.001 Par Value
|
|
|
CommonStock
$0.0001 Par Value
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
Balance
at June 30, 2019
|
|
|
13,992,340
|
|
|
$
|
13,992
|
|
|
|
1,327,640
|
|
|
$
|
1,328
|
|
|
|
1
|
|
|
$
|
0
|
|
|
|
42,066,269
|
|
|
$
|
4,207
|
|
|
$
|
43,184,984
|
|
|
$
|
(46,449,128
|
)
|
|
$
|
(3,244,617
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483,333
|
|
|
|
48
|
|
|
|
28,952
|
|
|
|
|
|
|
|
29,000
|
|
|
Shares
issued for conversion of notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,960,217
|
|
|
|
2,096
|
|
|
|
172,743
|
|
|
|
|
|
|
|
174,839
|
|
|
Net
loss for the three months ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(97,441
|
)
|
|
|
(97,441
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2019
|
|
|
13,992,340
|
|
|
$
|
13,992
|
|
|
|
1,327,640
|
|
|
$
|
1,328
|
|
|
|
1
|
|
|
$
|
0
|
|
|
|
63,509,819
|
|
|
$
|
6,351
|
|
|
$
|
43,386,679
|
|
|
$
|
(46,546,569
|
)
|
|
$
|
(3,138,219
|
)
|
SEE
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
VISIUM
TECHNOLOGIES, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Three-months
ended
|
|
|
|
|
September
30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(345,673
|
)
|
|
$
|
(97,441
|
)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Stock
based compensation
|
|
|
72,000
|
|
|
|
29,000
|
|
|
Gain on
change in derivative liabilities
|
|
|
(124,332
|
)
|
|
|
(278,012
|
)
|
|
Loss on
extinguishment of debt
|
|
|
154,901
|
|
|
|
40,414
|
|
|
Amortization of
debt discount
|
|
|
-
|
|
|
|
71,393
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
109,379
|
|
|
|
102,448
|
|
|
Accrued
interest
|
|
|
26,910
|
|
|
|
29,088
|
|
|
Accrued
compensation
|
|
|
84,000
|
|
|
|
84,000
|
|
|
Net
cash used in operating activities
|
|
|
(22,815
|
)
|
|
|
(19,110
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Advances from
(repayment to) officers
|
|
|
(5,500
|
)
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
(5,500
|
)
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash
|
|
|
(28,315
|
)
|
|
|
(16,110
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
30,251
|
|
|
|
18,668
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$
|
1,936
|
|
|
$
|
2,558
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Cash
paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock for conversion of notes payable and accrued interest (fair
value of the shares issued - $233,619)
|
|
$
|
73,768
|
|
|
$
|
174,839
|
|
SEE
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
1: ORGANIZATION, DESCRIPTION OF BUSINESS, GOING CONCERN AND BASIS
OF PRESENTATION
Visium
Technologies, Inc. (“Visium”) was incorporated in Nevada as Jaguar
Investments, Inc. during October 1987. During March 2003, a wholly
owned subsidiary of the Company merged with Freight Rate, Inc., a
development stage company in the logistics software business.
During May 2003, the Company changed its name to Power2Ship, Inc.
During October 2006, the Company merged with a newly formed, wholly
owned subsidiary, Fittipaldi Logistics, Inc., a Nevada corporation,
with the Company surviving but its name changed to Fittipaldi
Logistics, Inc. effective November 2006. During December 2007, the
Company merged with a newly formed, wholly owned subsidiary,
NuState Energy Holdings, Inc., a Nevada corporation, with the
Company surviving but renamed NuState Energy Holdings, Inc.
effective December 2007. In October 2015 the Company redomiciled
from Nevada and became a Florida corporation. In March 2018 the
Company changed its name to Visium Technologies, Inc.
Visium
is a provider of cyber security visualization, analytics, and
automation. Visium operates in the traditional cyber security
space, as well as in the cloud-based technology and Internet of
Things spaces. Visium provides cybersecurity technology solutions,
tools, and services to support commercial enterprises and
government’s ability to protect their data. Visium’s CyGraph
technology provides visualization, advanced cyber monitoring
intelligence, data modeling, analytics, and automation to help
reduce risk, simplify cyber security, and deliver better security
outcomes.
In
March 2019, Visium entered into a software license agreement with
MITRE Corporation to license a patented technology, known as CyGraph,
a tool for cyber warfare analytics, visualization, and knowledge
management. CyGraph provides advanced analytics for cybersecurity
situational awareness that is scalable, flexible, and
comprehensive.
Going Concern
The
accompanying financial statements have been prepared on a going
concern basis. For the three months ended September 30, 2020 we had
a net loss of $345,673, had net cash used in operating activities
of $22,815, and had negative working capital of $3,420,814. These
matters raise substantial doubt about the Company’s ability to
continue as a going concern for a period of one year from the date
of this filing. The Company’s ability to continue as a going
concern is dependent upon its ability to obtain the necessary
financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due, to fund
possible future acquisitions, and to generate profitable operations
in the future. Management plans to provide for the Company’s
capital requirements by continuing to issue additional equity and
debt securities. The outcome of these matters cannot be predicted
at this time and there are no assurances that, if achieved, the
Company will have sufficient funds to execute its business plan or
generate positive operating results. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
A
novel strain of coronavirus, the COVID-19 virus, may adversely
affect our business operations and financial
condition.
In
December 2019, an outbreak of the COVID-19 virus was reported in
Wuhan, China. On March 11, 2020, the World Health Organization
declared the COVID-19 virus a global pandemic and on March 13,
2020, President Donald J. Trump declared the virus a national
emergency in the United States. This highly contagious disease has
spread to most of the countries in the world and throughout the
United States, creating a serious impact on customers, workforces
and suppliers, disrupting economies and financial markets, and
potentially leading to a world-wide economic downturn. It has
caused a disruption of the normal operations of many businesses,
including the temporary closure or scale-back of business
operations and/or the imposition of either quarantine or remote
work or meeting requirements for employees, either by government
order or on a voluntary basis. The pandemic may adversely affect
our potential customers’ operations, our employees and our employee
productivity. It may also impact the ability of our subcontractors,
partners, and suppliers to operate and fulfill their contractual
obligations, and result in an increase in costs, delays or
disruptions in performance. These supply chain effects, and the
direct effect of the virus and the disruption on our employees and
operations, may negatively impact both our ability to meet customer
demand and our revenue and profit margins. Our employees are
working remotely and using various technologies to perform their
functions. We might experience delays or changes in customer
demand, particularly if customer funding priorities change.
Further, in reaction to the spread of COVID-19 in the United
States, many businesses have instituted social distancing policies,
including the closure of offices and worksites and deferring
planned business activity. The disruption and volatility in the
global and domestic capital markets may increase the cost of
capital and limit our ability to access capital. Both the health
and economic aspects of the COVID-19 virus are highly fluid and the
future course of each is uncertain. For these reasons and other
reasons that may come to light if the coronavirus pandemic and
associated protective or preventative measures expand, we may
experience a material adverse effect on our business operations,
revenues and financial condition; however, its ultimate impact is
highly uncertain and subject to change.
Basis of Presentation
The
unaudited interim consolidated financial information furnished
herein reflects all adjustments, consisting only of normal
recurring items, which in the opinion of management are necessary
to fairly state Visium Technologies, Inc.’s (the “Company” or “we”,
“us” or “our”) financial position, results of operations and cash
flows for the dates and periods presented and to make such
information not misleading. Certain information and footnote
disclosures normally included in annual financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America have been omitted pursuant
to rules and regulations of the Securities and Exchange Commission
(“SEC”), nevertheless, management of the Company believes that the
disclosures herein are adequate to make the information presented
not misleading.
These
unaudited consolidated financial statements should be read in
conjunction with the Company’s audited financial statements for the
year ended June 30, 2020, contained in the Company’s Annual Report
on Form 10-K filed with the SEC on October 9, 2020. The results of
operations for the three months ended September 30, 2020, are not
necessarily indicative of results to be expected for any other
interim period or the fiscal year ending June 30,
2021.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year
The
fiscal year ends on June 30. References to fiscal year 2021, for
example, refer to the fiscal year ending June 30,
2021.
Principles of Consolidation
The
accompanying consolidated financial statements have been prepared
in accordance with United States generally accepted accounting
principles and include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in
consolidation.
Use of Estimates
The
preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reporting amounts of revenues and
expenses during the reported period. Actual results will differ
from those estimates. Included in these estimates are assumptions
used in Cox, Ross & Rubinstein Binomial Tree stock-based
compensation valuation methods, such as expected volatility,
risk-free interest rate, and expected dividend rate and in the
valuation allowance of deferred tax assets and derivative
liability.
Cash and Cash Equivalents
The
Company considers all highly liquid, temporary, cash equivalents or
investments with an original maturity of three months or less when
purchased, to be cash equivalents. The Company had no cash
equivalents during the three months ended September 30, 2020 and
June 30, 2020.
Concentration of Credit Risks
The
Company is subject to a concentration of credit risk from
cash.
The
Company’s cash account is held at a financial institution and is
insured by the Federal Deposit Insurance Corporation, or FDIC, up
to $250,000. During the three months ended September 30, 2020 and
2019, the Company had not reached a bank balance exceeding the FDIC
insurance limit.
Convertible Instruments and Derivative Liabilities
The
Company accounts for convertible instruments (when it has
determined that the embedded conversion options should not be
bifurcated from their host instruments) in accordance with ASC
470-20, Debt with Conversion and Other Options. Accordingly, the
Company records, when necessary, discounts to convertible notes for
the intrinsic value of conversion options embedded in debt
instruments based upon the differences between the fair value of
the underlying common stock at the commitment date of the note
transaction and the effective conversion price embedded in the
note. Debt discounts under these arrangements are amortized over
the term of the related debt to their earliest date of redemption.
The Company also records deemed dividends for the intrinsic value
of conversion options embedded in preferred shares based upon the
differences between the fair value of the underlying common stock
at the commitment date of the note transaction and the effective
conversion price embedded in the note.
ASC
815-40, Contracts in Entity’s own Equity, generally provides that,
among other things, if an event is not within the entity’s control,
such contract could require net cash settlement and shall be
classified as an asset or a liability.
The
Company assessed the potential classification of its derivative
financial instruments as of September 30, 2020 and June 30, 2020,
which consist of convertible instruments and rights to shares of
the Company’s common stock, and determined that such derivatives
meet the criteria for liability classification under ASC
815.
ASC 815
generally provides three criteria that, if met, require companies
to bifurcate conversion options from their host instruments and
account for them as free standing derivative financial instruments.
These three criteria include circumstances in which (a) the
economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to the economic
characteristics and risks of the host contract; (b) the hybrid
instrument that embodies both the embedded derivative instrument
and the host contract is not re-measured at fair value under
otherwise applicable generally accepted accounting principles with
changes in fair value reported in earnings as they occur; and (c) a
separate instrument with the same terms as the embedded derivative
instrument would be considered a derivative instrument subject to
the requirements of ASC 815. ASC 815 also provides an exception to
this rule when the host instrument is deemed to be conventional, as
described.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
continued
Fair Value of Financial Instruments
The
Company accounts for assets and liabilities measured at fair value
on a recurring basis, in accordance with ASC Topic 820, Fair Value
Measurements and Disclosures, or ASC 820. ASC 820 establishes a
common definition for fair value to be applied to existing
generally accepted accounting principles that require the use of
fair value measurements, establishes a framework for measuring fair
value, and expands disclosure about such fair value
measurements.
ASC 820
defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Additionally,
ASC 820 requires the use of valuation techniques that maximize the
use of observable inputs and minimize the use of unobservable
inputs. These inputs are prioritized below:
|
Level
1:
|
Observable inputs
such as quoted market prices in active markets for identical assets
or liabilities.
|
|
|
|
|
Level
2:
|
Observable
market-based inputs or unobservable inputs that are corroborated by
market data.
|
|
|
|
|
Level
3:
|
Unobservable inputs
for which there is little or no market data, which require the use
of the reporting entity’s own assumptions.
|
Additional Disclosures Regarding Fair Value
Measurements
The
carrying value of cash, accounts payable and accrued expenses,
accrued compensation, notes payable and convertible promissory
notes payable, approximate their fair value due to the short
maturity of these items or the use of market interest
rates.
Business combinations
Business
combinations are accounted for at fair value. Acquisition costs are
expensed as incurred and recorded in selling, general and
administrative expenses. The accounting for business combinations
requires estimates and judgment as to expectations for future cash
flows of the acquired business, and the allocation of those cash
flows to identifiable intangible assets, in determining the
estimated fair value for assets acquired and liabilities assumed.
The fair values assigned to tangible and intangible assets acquired
and liabilities assumed, including contingent consideration, are
based on management’s estimates and assumptions, as well as other
information compiled by management, including valuations that
utilize customary valuation procedures and techniques. If the
actual results differ from the estimates and judgments used in
these estimates, the amounts recorded in the financial statements
could result in a possible impairment of the intangible assets and
goodwill, require acceleration of the amortization expense of
finite-lived intangible assets, or the recognition of additional
consideration which would be expensed. The fair value of contingent
consideration is remeasured each period based on relevant
information and changes to the fair value are included in the
operating results for the period.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
continued
Revenue Recognition
In May
2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic
606). The revenue recognition principle in ASU 2014-09 is
that an entity should recognize revenue to depict the transfer of
goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services. In addition, new and enhanced
disclosures will be required. Companies may adopt the new standard
either using the full retrospective approach, a modified
retrospective approach with practical expedients, or a cumulative
effect upon adoption approach. This standard is effective for
reporting periods beginning after December 15, 2019. Early adoption
is permitted. The Company early adopted this standard effective
July 1, 2019. Since the Company has not earned any revenue to date,
there has been no impact to the financial statements upon
adoption.
Income Taxes
The
Company accounts for income taxes pursuant to the provisions of ASC
740-10, “Accounting for Income Taxes,” which requires, among other
things, an asset and liability approach to calculating deferred
income taxes. The asset and liability approach requires the
recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. A
valuation allowance is provided to offset any net deferred tax
assets for which management believes it is more likely than not
that the net deferred asset will not be realized.
The
Company follows the provisions of ASC 740-10, “Accounting for
Uncertain Income Tax Positions”. When tax returns are filed, it is
highly certain that some positions taken would be sustained upon
examination by the taxing authorities, while others are subject to
uncertainty about the merits of the position taken or the amount of
the position that would be ultimately sustained. In accordance with
the guidance of ASC 740-10, the benefit of a tax position is
recognized in the financial statements in the period during which,
based on all available evidence, management believes it is more
likely than not that the position will be sustained upon
examination, including the resolution of appeals or litigation
processes, if any. Tax positions taken are not offset or aggregated
with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the
largest amount of tax benefit that is more than 50 percent likely
of being realized upon settlement with the applicable taxing
authority. The portion of the benefits associated with tax
positions taken that exceeds the amount measured as described above
should be reflected as a liability for uncertain tax benefits in
the accompanying balance sheet along with any associated interest
and penalties that would be payable to the taxing authorities upon
examination. The Company believes its tax positions are all highly
certain of being upheld upon examination. As such, the Company has
not recorded a liability for uncertain tax benefits.
The
Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an
entity should determine whether a tax position is effectively
settled for the purpose of recognizing previously unrecognized tax
benefits and provides that a tax position can be effectively
settled upon the completion of an examination by a taxing authority
without being legally extinguished. For tax positions considered
effectively settled, an entity would recognize the full amount of
tax benefit, even if the tax position is not considered more likely
than not to be sustained based solely on the basis of its technical
merits and the statute of limitations remains open. As of September
30, 2020, the Company had not filed tax returns for the tax years
ending June 30, 2008 through 2020 and such returns, when filed,
potentially will be subject to audit by the taxing authorities for
a minimum of three years beyond the filing date under the
three-year statute of limitations. The Company has not accrued any
potential tax penalties associated with not filing these tax
returns. Due to recurring losses, management believes such
potential tax penalties, if any, would not be material in
amount.
Share-Based Payments
The
Company accounts for stock-based compensation in accordance with
ASU 2020-07, Compensation – Stock Compensation (Topic 718). This
update is intended to reduce cost and complexity and to improve
financial reporting for share-based payments issued to
non-employees (for example, service providers, external legal
counsel, suppliers, etc.). The ASU expands the scope of Topic 718,
Compensation—Stock Compensation, which currently only includes
share-based payments issued to employees, to also include
share-based payments issued to non-employees for goods and
services. Consequently, the accounting for share-based payments to
non-employees and employees will be substantially
aligned.
Under
ASC Topic 718, “Compensation - Stock Compensation”. Under the fair
value recognition provisions of this topic, stock-based
compensation cost is measured at the grant date based on the fair
value of the award and is recognized as an expense on a
straight-line basis over the requisite service period, which is the
vesting period.
The
Company has elected to use the Cox, Ross & Rubinstein Binomial
Tree valuation model to estimate the fair value of its options,
which incorporates various subjective assumptions including
volatility, risk-free interest rate, expected life, and dividend
yield to calculate the fair value of stock option awards.
Compensation expense recognized in the statements of operations is
based on awards ultimately expected to vest and reflects estimated
forfeitures. ASC 718 requires forfeitures to be estimated at the
time of grant and revised, if necessary, in subsequent periods if
actual forfeitures differ from those estimates.
Segment Reporting
The
Company operates in one business segment which technologies are
focused on cybersecurity.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
continued
Recent Accounting Pronouncements
In May
2019, the FASB issued ASU No. 2020-05, Income Taxes (Topic 740):
Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 118, regarding the accounting implications of the
recently issued Tax Cuts and Jobs Act (the “Act”). This standard is
effective immediately. The update clarifies that in a company’s
financial statements that include the reporting period in which the
Act was enacted, the company must first reflect the income tax
effects of the Act in which the accounting under GAAP is complete.
These amounts would not be provisional amounts. The company would
also report provisional amounts for those specific income tax
effects for which the accounting under GAAP is incomplete, but a
reasonable estimate can be determined. The Company has recorded a
provisional amount which it believes is a reasonable estimate of
the effects of the Act on the Company’s financial statements as of
April 30, 2020. Technical corrections or other forthcoming guidance
could change how the Company interprets provisions of the Act,
which may impact its effective tax rate and could affect its
deferred tax assets, tax positions and/or its tax
liabilities.
In July
2017, the FASB issued Accounting Standards Update (“ASU”) No.
2017-11. “Earnings Per Share (Topic 260); Distinguishing
Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic
815): I. Accounting for Certain Financial Instruments with Down
Round Features, II. Replacement of the Indefinite Deferral for
Mandatorily Redeemable Financial Instruments of Certain Nonpublic
Entities and Certain Mandatorily Redeemable Non-controlling
Interests with a Scope Exception (“ASU 2017-11”) ASU 2017-11
revises the guidance for instruments with down round features in
Subtopic 815-40, Derivatives and Hedging - Contracts in Entity’s
Own Equity, which is considered in determining whether an
equity-linked financial instrument qualifies for a scope exception
from derivative accounting. An entity still is required to
determine whether instruments would be classified in equity under
the guidance in Subtopic 815-40 in determining whether they qualify
for that scope exception. If they do qualify, freestanding
instruments with down round features are no longer classified as
liabilities. ASU 2017-11 is effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15,
2019, and early adoption is permitted, including adoption in an
interim period. ASU 2017-11 provides that upon adoption, an entity
may apply this standard retrospectively to outstanding financial
instruments with a down round feature by means of a cumulative-
effect adjustment to the opening balance of accumulated deficit in
the fiscal year and interim period adoption. The Company has
adopted ASU 2017-11 retrospectively as of January 1, 2020. The
adoption of this ASU did not have any impact on its financial
statements.
Basic and Diluted Earnings Per Share
Basic
earnings per share are calculated by dividing income available to
stockholders by the weighted-average number of shares of Common
Stock outstanding during each period. Diluted earnings per share
are computed using the weighted average number of shares of Common
Stock and the dilutive Common Stock share equivalents outstanding
during the period. Dilutive Common Stock share equivalents consist
of shares issuable upon the exercise of in-the-money stock options
and warrants (calculated using the modified-treasury stock method)
and conversion of other securities such as convertible debt or
convertible preferred stock. Potential common shares that would be
as follows:
|
|
|
September
30,
|
|
|
June
30,
|
|
|
|
|
2020
|
|
|
2020
|
|
|
Weighted average
common shares outstanding
|
|
|
1,832,561,950
|
|
|
|
312,626,670
|
|
|
Effect
of dilutive securities-when applicable:
|
|
|
|
|
|
|
|
|
|
Convertible
promissory notes
|
|
|
768,576,702
|
|
|
|
1,014,701,330
|
|
|
Preferred
Stock
|
|
|
13,996,797
|
|
|
|
13,996,797
|
|
|
Warrants
|
|
|
500,000
|
|
|
|
500,000
|
|
|
Fully
diluted earnings per share—adjusted weighted-average shares and
assumed conversions
|
|
|
2,615,635,449
|
|
|
|
1,341,824,767
|
|
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
3: DERIVATIVE LIABILITIES
Derivative liability - warrants
The
Company issued warrants in connection with convertible notes
payable which were issued in January 2020. These warrants have
price protection provisions that allow for the reduction in the
exercise price of the warrants in the event the Company
subsequently issues stock or securities convertible into stock at a
price lower than the $0.15 per share exercise price of the
warrants. Simultaneously with any reduction to the exercise price,
the number of shares of common stock that may be purchased upon
exercise of each of these warrants shall be increased or decreased
proportionately, so that after such adjustment the aggregate
exercise price payable for the adjusted number of warrants shall be
the same as the aggregate exercise price in effect immediately
prior to such adjustment. Because it is indeterminate whether there
is a sufficient number of authorized and unissued shares exists at
the assessment date, the Company calculates a derivative liability
associated with the warrants in accordance with FASB ASC Topic
815-40-25.
Accounting for Derivative Warrant Liability
The
Company’s derivative warrant instruments have been measured at fair
value at September 30, 2020 using the Cox, Ross & Rubinstein
Binomial Tree valuation model. The Company recognizes the
derivative liability related to those warrants that contain price
protection features in its consolidated balance sheet as
liabilities. The liability is revalued at each reporting period and
changes in fair value are recognized currently in the consolidated
statements of operations. The initial recognition and subsequent
changes in fair value of the derivative warrant liability have no
effect on the Company’s cash flows.
Derivative liability – convertible notes
The
Company has certain convertible notes with variable price
conversion terms. Upon the issuance of these convertible notes and
as a consequence of their conversion features, the convertible
notes give rise to derivative liabilities. The Company’s derivative
liabilities related to its convertible notes payable have been
measured at fair value at September 30, 2020 and September 30, 2019
using the Cox, Ross & Rubinstein Binomial Tree valuation
model.
The
revaluation of the warrants and convertible debt at each reporting
period, as well as the charges associated with issuing additional
convertible notes, and warrants with price protection features,
resulted in the recognition of a gain of $124,332 and $278,012 for
the three months ended September 30, 2020 and 2019, respectively in
the Company’s consolidated statements of operations, under the
caption “Gain (loss) in change of fair value of derivative
liability”. The fair value of the warrants at September 30, 2020
and June 30, 2020 was $150 and $250, respectively. The fair value
of the derivative liability related to the convertible debt at
September 30, 2020 and June 30, 2020 is $314,071 and $438,303,
respectively, which is reported on the consolidated balance sheet
under the caption “Derivative liability”.
The
Company has determined its derivative liability to be a Level 3
fair value measurement. The significant assumptions used in the
Cox, Ross & Rubinstein Binomial Tree valuation of the
derivative are as follows:
|
|
|
Three
Months Ended September 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Effective exercise
price
|
|
$
|
0.00024
- $0.00039
|
|
|
$
|
0.0033
- $ 0.15
|
|
|
Effective market
price
|
|
$
|
0.0007
|
|
|
$
|
0.006
|
|
|
Volatility
|
|
|
248.13%
- 297.1
|
%
|
|
|
267.4%
- 373.6
|
%
|
|
Risk-free
interest
|
|
|
0.08% -
0.12
|
%
|
|
|
1.58% -
1.90
|
%
|
|
Terms
|
|
|
60-467
days
|
|
|
|
30 -
833 days
|
|
|
Expected dividend
rate
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Changes
in the derivative liabilities during the three months ended
September 30, 2020 is follows:
|
Derivative
liability at June 30, 2020
|
|
$
|
438,553
|
|
|
Gain on
change in fair value of derivative liability
|
|
|
(124,332
|
)
|
|
Derivative
liability at September 30, 2020
|
|
$
|
314,221
|
|
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
4: ACCRUED INTEREST PAYABLE
Changes
in accrued interest payable during the three months ended September
30, 2020 is as follows:
|
Accrued
interest payable at June 30, 2020
|
|
$
|
677,857
|
|
|
Interest expense
accrued for the three months ended September 30, 2020
|
|
|
26,908
|
|
|
Conversion of
accrued interest into common stock
|
|
|
(3,294
|
)
|
|
Accrued
interest payable at September 30, 2020
|
|
$
|
701,471
|
|
NOTE
5: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE
Convertible Notes Payable
At
September 30, 2020 and June 30, 2020 convertible debentures
consisted of the following:
|
|
|
September
30,
|
|
|
June
30,
|
|
|
|
|
2020
|
|
|
2020
|
|
|
Convertible notes
payable
|
|
$
|
782,490
|
|
|
$
|
852,962
|
|
|
Discount on
convertible notes
|
|
|
-
|
|
|
|
-
|
|
|
Convertible notes,
net
|
|
|
782,490
|
|
|
|
852,962
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes
payable to ASC Recap
|
|
|
147,965
|
|
|
|
147,965
|
|
|
Total
|
|
$
|
930,455
|
|
|
$
|
1,000,927
|
|
The
Company had convertible promissory notes aggregating approximately
$930,000 and $1.0 million at September 30, 2020 and June 30, 2020,
respectively. The related accrued interest amounted to
approximately $522,000 and $501,000 at September 30, 2020 and June
30, 2020, respectively. The convertible notes payable bear interest
at rates ranging from 0% to 18% per annum. The convertible notes
are generally convertible, at the holders’ option, at rates ranging
from $0.00024 to $22,500 per share, as a result of the two reverse
stock splits. At September 30, 2020, approximately $900,000 of
convertible promissory notes had matured, are in default and remain
unpaid.
On July
22, 2013 and May 6, 2014, the Company issued to ASC Recap LLC
(“ASC”) two convertible promissory notes with principal amounts of
$25,000 and $125,000, respectively. These two notes were issued as
a fee for services under a 3(a)10 transaction. While the Company
continues to carry the balance of these notes on its balance sheet,
management is disputing the notes and does not believe that the
balances of these notes are owed. See Note 9 – Commitments and
Contingencies in the footnotes to the financial statements. The
July 22, 2013 note matured on March 31, 2014 and a balance of
$22,965 remains unpaid. The May 6, 2014 note matured on May 6, 2016
and remains unpaid. The notes are convertible into the common stock
of the Company at any time at a conversion price equal to (i) 50%
of the lowest closing bid price of our common stock for the twenty
days prior to conversion or (ii) fixed price of $0.15 or $0.30 per
share.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE 5: CONVERTIBLE NOTES PAYABLE AND NOTE
PAYABLE, continued
For the
three months ended September 30, 2020, the following summarizes the
conversion of debt for common shares:
|
|
|
|
|
Amount of
|
|
|
Amount
of
|
|
|
|
|
|
Adjustment
|
|
|
|
|
|
Conversion
|
|
|
Shares
|
|
|
Converted
|
|
|
Converted
|
|
|
Conversion
|
|
|
To
|
|
|
|
|
|
Price
|
|
Name
|
Issued
|
|
|
Principal
|
|
|
Interest
|
|
|
Expense
|
|
|
Fair Value
|
|
|
Total
|
|
|
Per Share
|
|
Auctus
Funds, LLC
|
312,948,560
|
|
$
|
55,748
|
|
$
|
3,294
|
|
$
|
3,751
|
|
$
|
136,526
|
|
$
|
199,319
|
|
$
|
$0.00064
|
|
FirstFire
Global Opportunities Fund LLC
|
49,000,000
|
|
|
14,725
|
|
|
-
|
|
|
1,200
|
|
|
18,375
|
|
|
34,300
|
|
|
$0.00070
|
|
TOTAL
|
361,948,560
|
|
$
|
70,473
|
|
$
|
3,294
|
|
$
|
4,951
|
|
$
|
154,901
|
|
$
|
233,619
|
|
$
|
$0.00064
|
The
adjustment to Fair Value column represents additional paid-in
capital recorded with the conversion based on the fair value of the
shares issued upon partial conversion of the note at the time of
conversion. The adjustment to fair value on each conversion
resulted in a loss on extinguishment of debt.
Covenants and Other Matters
Certain of our convertible loan agreements contain
customary covenants and events of default and termination,
including cross-default provisions, whereby a default under
one loan and security agreement triggers a default under those
certain other convertible notes. The Auctus Funds note has a provision whereby a
default annual interest rate of 24% applies after the one year
anniversary of the note, and the FirstFire note has a provision
whereby the default annual interest rate of 15% applies after the
one year anniversary of the note, both of which occurred in
January, 2020. The Auctus Funds note contains a 150% payoff
provision if the note is in default, and is due and payable only
when the Company receives a notice of default from the
noteholder. As of September 30, 2020 and subsequently, the
Company has not received any notice of default.
Notes Payable
The
Company had promissory notes aggregating $205,000 at September 30,
2020 and June 30, 2020, respectively. The related accrued interest
amounted to approximately $179,000 and $175,000 at September 30,
2020 and June 30, 2020, respectively. The notes payable bear
interest at rates ranging from 0% to 16% per annum and are payable
monthly. All promissory notes outstanding as of September 30, 2020
have matured, are in default, and remain unpaid.
NOTE
6: STOCKHOLDERS’ DEFICIT
Common Stock
At
September 30, 2020, the Company had 10,000,000,000 authorized
common shares.
Issuances
of Common Stock During the Three Months Ended September 30,
2020
Convertible Notes Payable
During
the three months ended September 30, 2020 the Company issued
361,948,560 shares of its common stock related to the conversion of
$73,768 of principal and accrued interest of its convertible notes
payable, at an average contract conversion price of $0.00064 per
share. The conversions were recorded at fair value or at
$233,619.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
6: STOCKHOLDERS’ DEFICIT, continued
Stock Based Compensation
During
the three months ended September 30, 2020 the Company issued
90,000,000 shares of its $0.0001 par value common stock as
compensation to its directors and officers. The shares were valued
at $45,000, or $0.0005 per share, based on the share price at the
time of the transactions.
During
the three months ended September 30, 2020 30,200,001 shares of its
$0.0001 par value common stock vested to three consultants, as
compensation under three separate consulting agreements. The shares
were valued at $27,000, or $0.00096 per share.
Preferred Stock
Series
A and B issued and outstanding shares of the Company’s convertible
preferred stock have a par value of $0.001. All classes rank(ed)
prior to any class or series of the Company’s common stock as to
the distribution of assets upon liquidation, dissolution or winding
up of the Company or as to the payment of dividends. All preferred
stock shall have no voting rights except if the subject of such
vote would reduce the amount payable to the holders of preferred
stock upon liquidation or dissolution of the company and cancel and
modify the conversion rights of the holders of preferred stock as
defined in the certificate of designations of the respective series
of preferred stock.
Series A Convertible Preferred Stock
The
Series A Preferred Stock has a stated value of $750.00 per share.
Each one share of Series A Preferred Stock is convertible into one
(1) share of Common Stock. In the event the Common Stock price per
share is lower than $0.10 (ten cents) per share then the Conversion
shall be set at $0.035 per share. The Common Stock shares are
governed by Lock-Up/Leak-Out Agreements.
Series B Convertible Preferred Stock
Thirty
million (30,000,000) shares of preferred stock were designated as a
new Series B Preferred stock in April 2016. This new Series B
Preferred Stock has a $0.001 par value, and each 300 shares is
convertible into one share of the Company’s common stock, with a
stated value of $375 per share.
Series AA Convertible Preferred Stock
In
March 2018, the Company authorized and issued one share of Series
AA convertible preferred stock which provides for the holder to
vote on all matters as a class with the holders of Common Stock and
each share of Series AA Convertible Preferred Stock shall be
entitled to 51% of the common votes on any matters requiring a
shareholder vote of the Company. Each one share of Series AA
Convertible Preferred Stock is convertible into one (1) share of
Common Stock. Mark Lucky, our CFO, is the holder of the one share
of Series AA Convertible Preferred Stock.
Common
Stock Warrants
In
January 2019, we issued 500,000 warrants with a three year life and
a conversion price of $0.15 per share. These warrants have price
protection provisions that allow for the reduction in the current
exercise price upon the occurrence of certain events, including the
Company’s issuance of common stock or securities convertible into
or exercisable for common stock, such as options and warrants, at a
price per share less than the exercise price then in effect. For
instance, if the Company issues shares of its common stock or
options exercisable for or securities convertible into common stock
at an effective price per share of common stock less than the
exercise price then in effect, the exercise price will be reduced
to the effective price of the new issuance. Simultaneously with any
reduction to the exercise price, the number of shares of common
stock that may be purchased upon exercise of each of these warrants
shall be increased proportionately, so that after such adjustment
the aggregate exercise price payable for the adjusted number of
warrants shall be the same as the aggregate exercise price in
effect immediately prior to such adjustment.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
6: STOCKHOLDERS’ DEFICIT, continued
A
summary of the status of the Company’s outstanding common stock
warrants as of September 30, 2020 and changes during the three
months ending on that date is as follows:
|
|
|
Number
of
|
|
|
Weighted
Average
|
|
|
|
|
Warrants
|
|
|
Exercise
Price
|
|
|
Common
Stock Warrants
|
|
|
|
|
|
|
|
|
|
Balance
at beginning of year
|
|
|
500,000
|
|
|
$
|
0.15
|
|
|
Granted
|
|
|
-
|
|
|
|
|
|
|
Granted
due to repricing
|
|
|
-
|
|
|
|
-
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
Balance
at end of period
|
|
|
500,000
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
exercisable at end of period
|
|
|
500,000
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
fair value of warrants granted during the period
|
|
|
|
|
|
$
|
2,950
|
|
The
following table summarizes information about common stock warrants
outstanding at September 30, 2020:
|
|
|
|
Warrants
Outstanding
|
|
|
Warrants
Exercisable
|
|
|
Range
of Exercise Price
|
|
|
Number
Outstanding at September 30,2020
|
|
|
Weighted
Average Remaining Contractual Life
|
|
Weighted
Average Exercise Price
|
|
|
Number
Exercisable at September 30,2020
|
|
|
Weighted
Average Exercise Price
|
|
|
$
|
0.15
|
|
|
|
500,000
|
|
|
1.28
Years
|
|
$
|
0.15
|
|
|
|
500,000
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
500,000
|
|
|
1.28
Years
|
|
$
|
0.15
|
|
|
|
500,000
|
|
|
$
|
0.15
|
|
NOTE 7 - STOCK-BASED COMPENSATION
Restricted Stock Awards
Restricted stock
awards are awards of common stock that are subject to restrictions
on transfer and to a risk of forfeiture if the holder leaves the
Company before the restrictions lapse. The holder of a restricted
stock award is generally entitled at all times on and after the
date of issuance of the restricted shares to exercise the rights of
a shareholder of the Company, including the right to vote the
shares. The value of stock awards that vest over time was
established by the market price on the date of its grant. A summary
of the Company’s restricted stock activity for the three months
ended September 30, 2020 and June 30, 2020 is presented in the
following table:
|
|
|
For
the Three months ended
|
|
|
|
September
30, 2020
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Grant
Date
|
|
|
|
|
Shares
|
|
|
Fair
Value
|
|
|
Unvested at
beginning of period
|
|
|
666,659
|
|
|
$
|
0.06
|
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
Vested
|
|
|
(200,000
|
)
|
|
$
|
0.06
|
|
|
Unvested at end of
period
|
|
|
466,659
|
|
|
$
|
0.06
|
|
Unrecognized
compensation expense related to outstanding restricted stock awards
to employees and directors as of September 30, 2020 was $28,000 and
is expected to be recognized over a weighted average period of 0.58
years. The recognition of expense related to vested shares is
accounted for as stock-based consulting expense.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
8: RELATED PARTY TRANSACTIONS
Equity
transactions with related parties are described in Note
6.
From
time to time we have borrowed operating funds from Mr. Mark Lucky,
our Chief Financial Officer and from certain Directors, for working
capital. The advances were payable upon demand and were interest
free. At September 30, 2020 there was $96,840 outstanding of such
advances made to the Company.
NOTE
9: COMMITMENTS AND CONTINGENCIES
Contingencies
The
Company accounts for contingent liabilities in accordance with
Accounting Standards Codification (“ASC”) Topic 450, Contingencies. This guidance requires
management to assess potential contingent liabilities that may
exist as of the date of the financial statements to determine the
probability and amount of loss that may have occurred, which
inherently involves an exercise of judgment. If the assessment of a
contingency indicates that it is probable that a material loss has
been incurred and the amount of the liability can be estimated,
then the estimated liability would be accrued in the Company’s
financial statements. If the assessment indicates that a potential
material loss contingency is not probable but is reasonably
possible, or is probable but cannot be estimated, then the nature
of the contingent liability, and an estimate of the range of
possible losses, if determinable and material, would be disclosed.
For loss contingencies considered remote, no accrual or disclosures
are generally made. Management has assessed potential contingent
liabilities as of September 30, 2020, and based on the assessment
there are no probable loss contingencies requiring accrual or
disclosures within its financial statements.
License Contingent Consideration
Our
license agreements with the sellers of Threat Surface Solutions
Group, LLC includes a provision for a royalty payment based on ten
percent (10%) of sales generated by Threat Surface Solutions Group
beginning on the Agreement Date and ending on October 12, 2021,
capped at a maximum royalty of $2,500,000. As of September 30, 2020
we have not generated any revenue related to these license
agreements.
Our
license agreements with George Mason University and The MITRE
Corporation include provisions for a royalty payment on revenues
collected of 5% and 5%, respectively. As of September 30, 2020 we
have not generated any revenue related to these license
agreements.
Legal Claims
In July
2018, the Company was named as the defendant in a legal proceeding
brought by Tarpon Bay Partners LLC (the “Plaintiff”) in the
Judicial District Court of Danbury, Connecticut. Plaintiff asserts
that the Company failed to convert two convertible notes held by
Plaintiff. The Company is vigorously contesting this claim. There
are no other proceedings in which any of our directors, officers or
affiliates, or any registered or beneficial stockholder, is an
adverse party or has a material interest adverse to our
interest.
The
Company is subject to litigation, claims, investigations and audits
arising from time to time in the ordinary course of business.
Although legal proceedings are inherently unpredictable, the
Company believes that it has valid defenses with respect to any
matters currently pending against the Company and intends to defend
itself vigorously. The outcome of these matters, individually and
in the aggregate, is not expected to have a material impact on the
Company’s cash flows, results of operations, or financial
position.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2020
NOTE
10 – FAIR VALUE MEASUREMENT
Fair
value measurements
At
September 30, 2020 and June 30, 2020, the fair value of derivative
liabilities is estimated using the Cox, Ross & Rubinstein
Binomial Tree valuation model using inputs that include the
expected volatility, the implied risk-free interest rate, as well
as the expected dividend rate. The derivative liabilities are the
only Level 3 fair value measures.
At
September 30, 2020 the estimated fair values of the liabilities
measured on a recurring basis are as follows:
|
|
|
Fair
Value Measurements at
|
|
|
|
|
September
30, 2020:
|
|
|
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
|
Derivative
liability – Convertible notes
|
|
$
|
|
|
|
$
|
|
|
|
$
|
314,071
|
|
|
Derivative
liability – Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
150
|
|
|
Total
derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
314,221
|
|
NOTE
11: SUBSEQUENT EVENTS
In
October 2020, the Company entered into a securities purchase
agreement with three individual investors pursuant to which the
Company issued to each Investor an 8% Unsecured Promissory Note,
(collectively the “Notes”) in the total aggregate principal amount
of $225,000 in exchange for $225,000 cash and 135,000,000 shares of
restricted common stock of the Company, par value $0.0001 in the
aggregate.
In October
2020 our consultants vested 66,667 shares of our $0.0001 par value
common stock, valued at $4,000, or at an average price per share of
$0.06
In
October 2020, the Company repaid and satisfied in full the
convertible notes payable to Auctus Funds, LLC and FirstFire Global
Opportunities Fund, LLC.
In
October 2020, the Company issued 101,195,600 shares of its common
stock upon the conversion of principal of $19,181, and $309 of
accrued interest on its outstanding convertible notes, valued at
$0.0002 per share.
In
October 2020, two warrant holders exercised 206,781,370 warrants on
a cashless basis and received 191,195,600 shares of common stock
and 13,492,747 shares were used to cover the exercise
price.
In November 2020,
two warrant holders exercised 168,218,630 warrants on a cashless
basis and received 157,065,934 shares of common stock and
11,152,696 shares were used to cover the exercise
price.
ITEM
2. Management’s Discussion and Analysis and Results of
Operations
The following discussion of our financial condition and results of
operations should be read in conjunction with the financial
statements and related notes included elsewhere in this report.
Certain statements in this discussion and elsewhere in this report
constitute forward-looking statements. See ‘‘Cautionary Statement
Regarding Forward Looking Information’’ elsewhere in this report.
Because this discussion involves risk and uncertainties, our actual
results may differ materially from those anticipated in these
forward-looking statements.
Overview
Visium
Technologies, Inc. is a Florida corporation with offices based in
Fairfax, Virginia, focused on building a global cybersecurity
business, by advancing technology and cybersecurity tools and
services to support enterprises in protecting their most valuable
assets - their data, on their networks, in the cloud, and Internet
of Things (“IoT”).
Visium
is a provider of cyber security automation, analytics and
visualization. Visium operates in the traditional cyber security
space, as well as in the cloud-based technology and Internet of
Things (“IOT”) spaces.
Visium provides cybersecurity technology solutions, tools and
services to support commercial enterprises and governments ability
to protect their data. Visium’s CyGraph technology provides
visibility, advanced cyber monitoring intelligence, analytics and
automation to help reduce risk, simplify cyber security and deliver
better security outcomes.
In
March 2020, Visium entered into a software license agreement with
MITRE Corporation to license a patented technology, known as
CyGraph, a tool for cyber warfare analytics, visualization and
knowledge management. CyGraph provides advanced analytics for
cybersecurity situational awareness that is scalable, flexible and
comprehensive.
Employees
At
November 12, 2020, we had 3 full time employees.
Our
principal offices are located at 4094 Majestic Lane, Suite 360,
Fairfax, Virginia 22033. Our telephone number is (703)
273-0383.
Our
common stock is quoted on the OTC Pink under the symbol
“VISM”.
VISIUM
TECHNOLOGIES, INC.
RESULTS
OF OPERATIONS
Discussion
of Results for Three Month Period Ended September 30, 2020 and
2019
|
|
|
|
|
|
Increase/
|
|
|
Increase/
|
|
|
|
|
Three-month
period ended
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
|
|
September
30,
|
|
|
in
$ 2020
|
|
|
in
% 2020
|
|
|
|
|
2020
|
|
|
2019
|
|
|
vs
2019
|
|
|
vs
2019
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general
and administrative
|
|
$
|
193,196
|
|
|
$
|
199,058
|
|
|
$
|
(5,862
|
)
|
|
|
(2.9
|
)%
|
|
Development
expense
|
|
|
95,000
|
|
|
|
35,500
|
|
|
|
59,500
|
|
|
|
167.6
|
%
|
|
Total
operating expenses
|
|
|
288,196
|
|
|
|
234,558
|
|
|
|
53,638
|
|
|
|
22.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(288,196
|
)
|
|
|
(234,558
|
)
|
|
|
53,638
|
|
|
|
22.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
change in fair value of derivative liabilities
|
|
|
124,332
|
|
|
|
278,012
|
|
|
|
(153,680
|
)
|
|
|
(55.3
|
)%
|
|
Loss on
extinguishment of debt
|
|
|
(154,901
|
)
|
|
|
(40,414
|
)
|
|
|
(114,487
|
)
|
|
|
283.3
|
%
|
|
Interest
expense
|
|
|
(26,908
|
)
|
|
|
(100,481
|
)
|
|
|
73,573
|
|
|
|
(73.2
|
)%
|
|
|
|
|
(57,477
|
)
|
|
|
137,117
|
|
|
|
(194,594
|
)
|
|
|
(141.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(345,673
|
)
|
|
|
(97,441
|
)
|
|
$
|
(248,232
|
)
|
|
|
(254.8
|
)%
|
Selling,
General, and Administrative Expenses
For the
three months ended September 30, 2020, selling, general and
administrative expenses were $193,196 as compared to $199,058 for
the three months ended September 30, 2019, a decrease of $5,862 or
approximately 2.9%. For the three months ended September 30, 2020
and 2019 selling, general and administrative expenses consisted of
the following:
|
|
|
Three
Months Ended
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
Increase/
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Decrease
|
|
|
%
Change
|
|
|
Accounting
expense
|
|
$
|
22,950
|
|
|
$
|
23,012
|
|
|
$
|
(62
|
)
|
|
|
(0.3
|
%
|
|
Consulting
fees
|
|
|
-
|
|
|
|
30,000
|
|
|
|
(30,000
|
)
|
|
|
(100.0
|
)%
|
|
Salaries
|
|
|
84,000
|
|
|
|
84,000
|
|
|
|
-
|
|
|
|
0.0
|
%
|
|
Legal
and professional fees
|
|
|
10,500
|
|
|
|
7,060
|
|
|
|
3,440
|
|
|
|
48.7
|
%
|
|
Travel
expense
|
|
|
-
|
|
|
|
8,784
|
|
|
|
(8,784
|
)
|
|
|
(100.0
|
)%
|
|
Occupancy
expense
|
|
|
-
|
|
|
|
1,431
|
|
|
|
(1,431
|
)
|
|
|
(100.0
|
)%
|
|
Telephone
expense
|
|
|
900
|
|
|
|
900
|
|
|
|
-
|
|
|
|
0.0
|
%
|
|
Website
expense
|
|
|
651
|
|
|
|
660
|
|
|
|
(9
|
)
|
|
|
(1.4
|
)%
|
|
Marketing
Expense
|
|
|
-
|
|
|
|
9,948
|
|
|
|
(9,948
|
)
|
|
|
(100.0
|
)%
|
|
Stock
based consulting expense
|
|
|
27,000
|
|
|
|
29,000
|
|
|
|
(2,000
|
)
|
|
|
(6.9
|
)%
|
|
Stock
based compensation
|
|
|
45,000
|
|
|
|
-
|
|
|
|
45,000
|
|
|
|
148.3
|
%
|
|
Other
|
|
|
2,195
|
|
|
|
4,263
|
|
|
|
(2,068
|
)
|
|
|
(48.5
|
)%
|
|
|
|
$
|
193,196
|
|
|
$
|
199,058
|
|
|
$
|
(5,862
|
)
|
|
|
(2.9
|
)%
|
The
decrease in selling, general and administrative expenses during
fiscal Q1 of 2020, when compared with the prior year, is primarily
due to a decrease in consulting expense of $30,000, travel expense
of $8,748, and marketing expense of $9,948, offset primarily by an
increase in stock based compensation of $45,000.
We
believe that our selling, general, and administrative expenses will
increase as we increase our business activity over the remainder of
fiscal 2020.
Development
Expense
|
|
|
Three-Months
Ended
|
|
|
|
|
|
|
|
September
30,
|
|
|
%
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Change
|
|
|
Development
expense
|
|
$
|
95,000
|
|
|
$
|
35,500
|
|
|
$
|
167.6
|
|
Development expense
represents the expense of further enhancing and commercializing
CyGraph. We believe that our development expense will continue at a
lower expense rate for the remainder of fiscal 2020.
Interest
Expense
|
|
|
Three-Months
Ended
|
|
|
|
|
|
|
|
September
30,
|
|
|
%
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Change
|
|
|
Interest
expense
|
|
$
|
26,908
|
|
|
$
|
100,481
|
|
|
$
|
(73.2
|
)%
|
Interest expense
represents stated interest of notes and convertible notes payable,
along with the amortization of debt discount. The decrease in
interest expense during the three-month period ended September 30,
2020 is primarily due to the decrease in discount amortization
expense of $85,000 and by lower balances of interest-bearing
promissory notes during the three-month period ending September 30,
2020 when compared to the prior year period.
Liquidity
and Capital Resources
|
|
|
Balance
at
|
|
|
|
|
September
30, 2020
|
|
|
June
30, 2020
|
|
|
Cash
|
|
$
|
1,936
|
|
|
$
|
30,251
|
|
|
Accounts payable
and accrued expenses
|
|
|
438,234
|
|
|
|
333,805
|
|
|
Accrued
compensation
|
|
|
736,529
|
|
|
|
652,529
|
|
|
Notes,
convertible notes, and accrued interest payable
|
|
$
|
1,836,926
|
|
|
$
|
1,883,784
|
|
At
September 30, 2020 and June 30, 2020, our total assets consisted of
cash.
We do
not have any material commitments for capital
expenditures.
The
objective of liquidity management is to ensure that we have ready
access to sufficient funds to meet commitments and effectively
implement our growth strategy. Our primary sources are financing
activities such as the issuance of notes payable and convertible
notes payable. In the past, we have mostly relied on debt and
equity financing to provide for our operating needs.
We
cannot ascertain that we have sufficient funds from operations to
fund our ongoing operating requirements through June 30, 2021. We
may need to raise funds to enhance our working capital and use them
for strategic purposes. If such need arises, we intend to generate
proceeds from either debt or equity financing.
We
intend to finance our operations using a mix of equity and debt
financing. We do not anticipate incurring capital expenditures for
the foreseeable future. We anticipate that we will need to raise
approximately $180,000 per year in the near term to finance the
recurring costs of being a publicly-traded company. In the
long-term, we anticipate we will need to raise a substantial amount
of capital to complete an acquisition. We are unable to quantify
the resources we will need to successfully complete an acquisition.
If these funds cannot be obtained, we may not be able to consummate
an acquisition or merger, and our business may fail as a
result.
Going
Concern
The
accompanying financial statements have been prepared on a going
concern basis. The Company has used net cash in its operating
activities of approximately $22,815 and $19,110 during the
thee-month periods ended September 30, 2020 and 2019, respectively,
and has a working capital deficit of approximately $3.4 million and
$3.4 million at September 30, 2020 and June 30, 2020, respectively.
The Company’s ability to continue as a going concern is dependent
upon its ability to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business
operations when they come due, to fund possible future
acquisitions, and to generate profitable operations in the future,
once a merger with an operating company is consummated. Management
plans may continue to provide for its capital requirements by
issuing additional equity securities and debt and the Company will
continue to find possible acquisition targets. The outcome of these
matters cannot be predicted at this time and there are no
assurances that if achieved, the Company will have sufficient funds
to execute its business plan or generate positive operating
results.
Capital
Raising Transactions
None
Other
outstanding obligations at September 30, 2020
Convertible Notes Payable
The
Company had convertible promissory notes aggregating $782,000
outstanding at September 30, 2020. The accrued interest amounted to
approximately $521,600 as of September 30, 2020. The Convertible
Notes Payable bear interest at rates ranging between 0% and 18% per
annum. Interest is generally payable monthly. The Convertible Notes
Payable are generally convertible at rates ranging between $0.00024
and $0.15 per share, at the holders’ option. At September 30, 2020,
approximately $752,000 of the promissory notes have
matured.
Convertible notes payable to ASC Recap LLC
On July
22, 2013 and May 6, 2014, the Company issued to ASC Recap LLC
(“ASC”) two convertible promissory notes with principal amounts of
$25,000 and $125,000, respectively. These two notes were issued as
a fee for services under a 3(a)10 transaction that was never
consummated and therefore there was no performance by ASC to earn
the notes. As a result, while the Company continues to carry the
balance of these notes on its balance sheet, it does not believe
the notes payable balances are owed. The July 22, 2013 note matured
on March 31, 2014 and a balance of $22,965 remains unpaid. The May
6, 2014 note matured on May 6, 2016 and remains unpaid. The notes
are convertible into the common stock of the Company at any time at
a conversion price equal to 50% of the lowest closing bid price of
our common stock for the twenty days prior to
conversion.
Notes Payable
The
Company had promissory notes aggregating $205,000 at September 30,
2020. The related accrued interest amounted to approximately
$179,000 at September 30, 2020. The Notes Payable bear interest at
a rate of 16% per annum. Interest is payable monthly. All
promissory notes have matured as of September 30,
2020.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Not
applicable to a smaller reporting company.
Item
4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our
management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule
13a-15(f) under the Exchange Act. Our management assessed the
effectiveness of our internal control over financial reporting as
of September 30, 2020. In making this assessment, our management
used criteria issued by the Committee of Sponsoring Organizations
of the Treadway Commission in Internal Control Over Financial
Reporting – Guidance for Smaller Public Companies.
During
our assessment of the design and the effectiveness of internal
control over financial reporting as of September 30, 2020,
management identified the following material
weaknesses:
|
|
●
|
While
we have processes in place, there are no formal written policies
and procedures related to certain financial reporting
processes;
|
|
|
|
|
|
|
●
|
There
is no formal documentation in which management specified financial
reporting objectives to enable the identification of risks,
including fraud risks;
|
|
|
|
|
|
|
●
|
Our
Board of Directors consisted of four members, however we lack the
resources and personnel to implement proper segregation of duties
or other risk mitigation systems.
|
A
material weakness is “a significant deficiency, or a combination of
significant deficiencies, that result in more than a remote
likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected by us in a
timely manner.” A significant deficiency is a deficiency or a
combination of deficiencies, in internal control over financial
reporting that is less severe than a material weakness, yet
important enough to merit attention by those responsible for
oversight of the registrant’s financial reporting.
We
intend to gradually improve our internal control over financial
reporting to the extent that we can allocate resources to such
improvements. We intend to prioritize the design of our internal
control over financial reporting starting with our control
environment and risk assessments and ending with control
activities, information and communication activities, and
monitoring activities. Although we believe the time to adapt in the
next year will help position us to provide improved internal
control functions into the future, in the interim, these changes
caused control deficiencies, which in the aggregate resulted in a
material weakness. Due to the existence of these material
weaknesses, our management, including our Chief Executive Officer
and Chief Financial Officer, concluded that our internal control
over financial reporting was not effective as of September 30,
2020.
This
annual report does not include an attestation report of the
Company’s independent registered public accounting firm regarding
internal control over financial reporting. Management’s report was
not subject to attestation by the Company’s independent registered
public accounting firm pursuant to the rules of the SEC that permit
smaller reporting companies to provide only the management’s report
in this annual report.
Changes in Internal Control Over Financial Reporting
During
the quarter ended September 30, 2020, there were no changes in our
internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
With
the exception of the item described below, at September 30, 2020
the Company is not the subject of, or party to, any pending or
threatened, legal actions.
In July
2019 the Company was named as the defendant in a legal proceeding
brought by Tarpon Bay Partners LLC (the plaintiff) in the Judicial
District Court of Danbury, Connecticut. The plaintiff asserts that
the Company failed to convert two convertible notes held by the
Plaintiff. The Company is vigorously contesting this
claim.
From
time to time, we may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business.
However, litigation is subject to inherent uncertainties, and an
adverse result in these or other matters may arise from time to
time that may harm our business.
Item
1A. Risk Factors.
In
addition to the other information set forth in this report, you
should carefully consider the factors discussed under the heading
“Risk Factors” in our Annual Report on Form 10-K filed on September
28, 2020, which could materially affect our business operations,
financial condition or future results. Additional risks and
uncertainties not currently known to us or that we currently deem
to be immaterial also may materially adversely affect our business
operations and/or financial condition. There have been no material
changes to our risk factors since the filing of our Form
10-K.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.
During
the three months ended September 30, 2020 the Company issued
20,960,217 shares of its common stock related to the conversion of
$90,212 of principal and accrued interest of its convertible notes
payable, at an average contract conversion price of $0.0043 per
share. The issuance was exempt from registration under the
Securities Act of 1933 in reliance on an exemption provided by
Section 4(2) of that act.
During
the three months ended September 30, 2020 the Company issued
483,333 shares of its $0.0001 par value common stock to two
consultants, as compensation under two separate consulting
agreements. The shares were valued at $29,000, or $0.06 per
share.
Item
3. Defaults Upon Senior Securities.
None
Item
4. Mine Safety Disclosures.
Not
applicable to our operations.
Item
5. Other Information.
None
Item
6. Exhibits
|
31.1
|
Certification of
the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 *
|
|
|
|
|
31.2
|
Certification of
the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 *
|
|
|
|
|
32.1
|
Certification of
Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 *
|
|
|
|
|
32.2
|
Certification of
Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 *
|
* Filed
herein
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
|
VISIUM
TECHNOLOGIES, INC.
|
|
|
|
|
|
|
By:
|
/S/ Mark Lucky
|
|
November 12,
2020
|
|
Mark
Lucky
|
|
|
|
CEO,
principal executive officer
|
|
|
|
|
|
|
By:
|
/S/ Mark Lucky
|
|
November 12,
2020
|
|
Mark
Lucky
|
|
|
|
CFO,
principal accounting officer
|
