VISM Visium Technologies Inc (PK)

VISIUM TECHNOLOGIES, INC.

(Exact Name of Registrant as specified in its Charter)

 

 

Florida		7371		87-0449667
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Number)		(I.R.S. Employer Identification Number)

Large accelerated filer [ ]		Accelerated filer [ ]
Non-accelerated filer [ ]		Smaller reporting company [X]
		Emerging growth company [ ]

CERTAIN STATEMENTS IN THIS ANNUAL REPORT CONTAIN OR MAY CONTAIN FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS WERE BASED ON VARIOUS FACTORS AND WERE DERIVED UTILIZING NUMEROUS ASSUMPTIONS AND OTHER FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO, OUR ABILITY TO IMPLEMENT OUR BUSINESS MODEL, RAISE SUFFICIENT CAPITAL TO FUND OUR OPERATING LOSSES AND PAY OUR ONGOING OBLIGATIONS, ECONOMIC AND MARKET CONDITIONS AND FLUCTUATIONS, GOVERNMENT AND INDUSTRY REGULATION, 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. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS AND READERS SHOULD CAREFULLY REVIEW THIS ANNUAL REPORT IN ITS ENTIRETY, INCLUDING THE RISKS DESCRIBED IN PART I. DESCRIPTION OF BUSINESS - RISK FACTORS. EXCEPT FOR OUR ONGOING OBLIGATIONS TO DISCLOSE MATERIAL INFORMATION UNDER THE FEDERAL SECURITIES LAWS, WE UNDERTAKE NO OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO ANY FORWARD-LOOKING STATEMENTS, TO REPORT EVENTS OR TO REPORT THE OCCURRENCE OF UNANTICIPATED EVENTS. THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS ANNUAL REPORT, AND YOU SHOULD NOT RELY ON THESE STATEMENTS WITHOUT ALSO CONSIDERING THE RISKS AND UNCERTAINTIES ASSOCIATED WITH THESE STATEMENTS AND OUR BUSINESS.

PART I

 

Item 1. Business

 

Overview

 

Visium Technologies, Inc. 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 March 2018, the Company brought in a new management team and changed its name to Visium Technologies, Inc.

 

Visium is a provider of cyber security visualization, big data analytics, and automation that 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 is a military-grade highly scalable big data analytics tool for Cybersecurity, based on graph database technology. The development of the technology was sponsored by, and is currently in use by US Army Cyber Command. CyGraph provides advanced analytics for cybersecurity situational awareness that is scalable, flexible, and comprehensive. Visium has completed significant proprietary product development efforts to commercialize CyGraph whch the Company as rebranded as TruContext.

Plan of Operation

Visium operates in the traditional cyber security space, and provides solutions, tools and services related to Security information and event management (SIEM).  Our TruContext technology provides visualization, advanced cyber monitoring intelligence, data modeling, analytics and automation to help reduce risk, simplify cyber security and deliver better security outcomes. Visium currently plans to generate revenue in three primary ways –

●

through a virtual appliance model, primarily targeted to the Federal government, charging a seat license

●

through a SaaS model, charging a recurring monthly license fee for TruContext; and

●

through professional services to support and deliver cybersecurity solutions and services to its customers

 

The Company has developed integration partnerships with larger established technology companies and is using these partnerships as part of its go-to-market strategy.  In addtion, the Company has partnered with value-added ressellers that sell to the federal government and commercial markets.  The Company is focused on digital risk management, cybersecurity solutions, and technology services for network physical security, the Cloud, and mobility solutions. We solve mission-critical problems.

 

 Employees

 

As of September 30, 2021, we had eight (8) full time employees.

 

Third-Party Service Providers

 

We are heavily reliant on our technology and infrastructure to provide our products and services to our customers. For example, we host many of our products using third-party data center facilities, and we do not control the operation of these facilities. In addition, we rely on certain technology that we license from third parties, including third-party commercial software and open source software, which is used with certain of our solutions.

 

Governmental Regulation

 

We collect, use, store or disclose an increasingly high volume, variety, and velocity of personal information, including from employees and customers, in connection with the operation of our business. The personal information we process is subject to an increasing number of federal, state, local, and foreign laws regarding privacy and data security.

 

Competition

 

The markets for our solutions are highly competitive, and we expect both the requirements and pricing competition to increase, particularly given the increasingly sophisticated attacks, changing customer preferences and requirements, current economic pressures, and market consolidation. Competitive pressures in these markets may result in price reductions, reduced margins, loss of market share and inability to gain market share, and a decline in sales, any one of which could seriously impact our business, financial condition, results of operations, and cash flows. We may face competition due to changes in the manner that organizations utilize IT assets and the security solutions applied to them, such as the provision of privileged account security functionalities as part of public cloud providers’ infrastructure offerings, or cloud-based identity management solutions. Limited IT budgets may also result in competition with providers of other advanced threat protection solutions such as McAfee, LLC, Palo Alto Networks, Splunk Inc., and NortonLifeLock, Inc. (formerly known as Symantec Corporation acquired by Broadcom Inc.). We also may compete, to a certain extent, with vendors that offer products or services in adjacent or complementary markets to privileged access management, including identity management vendors and cloud platform providers such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure.

 

Available Information

 

All reports of the Company filed with the SEC are available free of charge through the SEC’s website at www.sec.gov. In addition, the public may read and copy materials filed by the Company at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain additional information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

 

Item 1A. Risk Factors

 

The common shares of our Company are considered speculative. You should carefully consider the following risks and uncertainties in addition to other information in this annual report in evaluating our Company and our business before purchasing our common shares. Our business, operating or financial condition could be harmed due to any of the following risks:

 

Management and our auditors have raised substantial doubts as to our ability to continue as a going concern.

 

Our financial statements have been prepared assuming we will continue as a going concern. Since inception we have experienced recurring net losses which losses caused an accumulated deficit of approximately $51.4 million as of June 30, 2021. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The IT security market is rapidly evolving within the increasingly challenging cyber threat landscape and the continuing use of hybrid on-premise and cloud-based environments. As a result of unanticipated market, industry or company developments our sales may not continue to grow at current rates or may decline, and our share price could decrease.

 

We operate in a rapidly evolving industry focused on securing organizations’ IT systems and sensitive data. Our solutions focus on safeguarding privileged accounts, credentials, and secrets. Privileged accounts are those accounts within an organization that give users, applications, and machine identities the highest levels of access, or “privileged” access, to IT systems and infrastructure, industrial control systems, applications and data both on-premises and in cloud environments. While breaches of such privileged accounts have continued to gain media attention in recent years, IT security spending within enterprises is often concentrated on endpoint and network security products designed to stop threats from penetrating corporate networks. Organizations may allocate all or most of their IT security budgets to these products and may not adopt our solutions in addition to such products. Organizations are moving portions of their IT systems to be managed by third parties, primarily infrastructure, platform and application service providers, and may rely on such providers’ internal security measures.

 

Further, security solutions such as ours, which are focused on disrupting cyber attacks by insiders and external perpetrators that have penetrated an organization’s on-premise or cloud environment, represent a security layer designed to respond to advanced threats and more rigorous compliance standards and audit requirements. However, advanced cyber attackers are skilled at adapting to new technologies and developing new methods of gaining access to organizations’ sensitive data. As our customers’ technologies and business plans evolve and become more complex, we expect them to face new and increasingly sophisticated methods of attack. We face significant challenges in ensuring that our solutions effectively identify and respond to such attacks without disrupting the performance of our customers’ IT systems. As a result, we must continually modify and improve our products, services, and licensing models in response to market and technology trends to ensure we are meeting market needs and continue providing valuable solutions that can be deployed in a variety of environments, including cloud and hybrid.

 

We cannot guarantee that we will be able to anticipate future market needs and opportunities or be able to develop or acquire product enhancements or new products to meet such needs or opportunities in a timely manner or at all. Delays in developing, completing or delivering new or enhanced products could cause our offerings to be less competitive, impair customer acceptance of our solutions and result in delayed or reduced revenue for our solutions.

 

In addition, any changes in compliance standards or audit requirements that reduce the priority for the types of controls, security, monitoring and analysis that our solutions provide would adversely impact demand for our solutions. It is therefore difficult to predict how large the market will be for our solutions. If our solutions are not viewed by organizations as necessary, or if customers do not recognize the benefit of our solutions as a critical layer of an effective security strategy, then our revenues may not continue to grow at their current rate or may decline, which could cause our share price to decrease in value.

 

Our reputation and business could be harmed based on real or perceived shortcomings, defects or vulnerabilities in our solutions or the provision of our services, or due to the failure of our customers, channel partners, managed security service providers, or subcontractors to correctly implement, manage and maintain our solutions, resulting in loss of existing or new customers, lawsuits or financial losses.

 

Security products and solutions are complex in design and deployment and may contain errors that are not capable of being remediated or detected until after their deployment. Any errors, defects, or misconfigurations could cause our products or services to not meet specifications, be vulnerable to security attacks or fail to secure networks and could negatively impact customer operations and harm our business and reputation. In particular, we may suffer significant adverse publicity and reputational harm, including a downgrade in our industry leadership position by industry analysts, if our solutions (or the services we provide in relation to our solutions) are associated, or are believed to be associated with, or fail to reasonably protect against, a significant breach or a breach at a high profile customer, managed service provider network, or third party system utilized by us as part of our cloud-based security solution.

 

Further, the third party data hosting facilities used for the provision of our SaaS solutions may experience damages, interruptions or other unanticipated problems that could result in disruptions in the provision of these solutions. Any disruptions or other performance problems with our SaaS solutions could harm our reputation and business, damage our customers’ businesses, subject us to potential liability, cause customers to terminate or not renew their subscriptions to our SaaS solutions and make it more challenging for us to retain existing customers and acquire new customers.

 

False detection of threats (referred to as “false positives”), while typical in our industry, may reduce perception of the reliability of our products and may therefore adversely impact market acceptance of our products. If our solutions restrict legitimate privileged access by authorized personnel to IT systems and applications by falsely identifying those users as attackers or otherwise unauthorized, our customers’ businesses could be harmed.

 

Our solutions not only reinforce but also rely on the common security concept of placing multiple layers of security controls throughout an IT system. The failure of our customers, channel partners, managed service providers or subcontractors to correctly implement and effectively manage and maintain our solutions (and the environments in which they are utilized), or to consistently implement and utilize generally accepted and comprehensive, multi-layered security measures and processes in customer networks, may lessen the efficacy of our solutions.Additionally, our customers or our channel partners may independently develop plug-ins or change existing plug-ins or APIs that we provided to them for interfacing purposes in an incorrect or insecure manner. Such failures or actions may lead to security breaches and data loss, which could result in a perception that our solutions failed. Further, our failure to provide our customers and channel partners with adequate services or inaccurate product documentation related to the use, implementation and maintenance of our solutions, could lead to claims against us.

 

An actual or perceived cyber attack, other security breach or theft of our customers’ data, regardless of whether the breach or theft is attributable to the failure of our products, SaaS solutions or the services we provided in relation thereto, could adversely affect the market’s perception of the efficacy of our solutions and our industry standing, cause current or potential customers to look to our competitors for alternatives to our solutions and subject us to lawsuits, indemnity claims and financial losses, as well as the expenditure of significant financial resources to analyze, correct or eliminate any vulnerabilities. In addition, provisions in our license agreements that attempt to limit our liabilities towards our customers, channel partners and relevant third parties may not withstand legal challenges, and certain liabilities may not be limited or capped. Additionally, any insurance coverage we may have may not adequately cover all claims asserted against us or may cover only a portion of such claims. An actual or perceived cyber attack could also cause us to suffer reputational harm, lose existing customers and potential new customers, or deter new and existing customers from purchasing or implementing our products.

 

We face intense competition from a wide variety of IT security vendors operating in different market segments and across diverse IT environments, which may challenge our ability to maintain or improve our competitive position or to meet our planned growth rates.

 

The IT security market in which we operate is characterized by intense competition, constant innovation, rapid adoption of different technological solutions and services, and evolving security threats. We compete with a multitude of companies that offer a broad array of IT security products that employ different approaches and delivery models to address these evolving threats.

 

We may face competition due to changes in the manner that organizations utilize IT assets and the security solutions applied to them, such as the provision of privileged account security functionalities as part of public cloud providers’ infrastructure offerings, or cloud-based identity management solutions. Limited IT budgets may also result in competition with providers of other advanced threat protection solutions such as McAfee, LLC, Palo Alto Networks, Splunk Inc., and NortonLifeLock, Inc. (formerly known as Symantec Corporation acquired by Broadcom Inc.). We also may compete, to acertain extent, with vendors that offer products or services in adjacent or complementary markets to privileged access management, including identity management vendors and cloud platform providers such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure. As the privileged access management market has matured significantly over the recent years, the entry barrier is now lower and it is easier for competitors to compete in the market. Some of our competitors are large companies and have widertechnical and financial resources and broader customer bases used to bring competitive solutions to the market. These companies may already have existing relationships as an established vendor for other product offerings, and certain customers may prefer one single IT vendor for product security procurement rather than purchasing solely based on product performance. Such companies may use these advantages to offer products and services that are perceived to be as effective as ours at a lower price or for free as part of a larger product package or solely in consideration for maintenance and services fees, which could result in increased market pressure to offer our solutions and services at lower prices. They may also develop different products to compete with our current solutions and respond more quickly and effectively than we do to new or changing opportunities, technologies, standards or client requirements or enjoy stronger sales and service capabilities in certain regions. Additionally, niche vendors are developing and marketing lower cost solutions with limited privileged access management functionality that may impact our ability to maintain premium market pricing. Our competitors may enjoy potential competitive advantages over us, such as:

 

● greater name recognition, a longer operating history and a larger customer base, notwithstanding the increased visibility of our brand in recent years since our initial public offering;

● larger sales and marketing budgets and resources;

● broader distribution and established relationships with channel partners, advisory firms and customers;

● increased effectiveness in protecting, detecting and responding to cyber attacks;

● greater or localized resources for customer support and provision of services;

● greater speed at which a solution can be deployed and implemented;

● greater resources to make acquisitions;

● larger intellectual property portfolios; and

● greater financial, technical and other resources.

 

Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources and capabilities. Current or potential competitors have been acquired and consolidated or may be acquired by third parties with greater resources in the future. As a result of such acquisitions, our current or potential competitors may be able to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products and services, initiate or withstand substantial price competition, take advantage of other opportunities more readily or develop and expand their product and service offerings more quickly than we do. Larger competitors with more diverse product offerings may reduce the price of products that compete with ours in order to promote the sale of other products or may bundle them with other products, which would lead to increased pricing pressure on our products and could cause the average sales prices for our products to decline. Similarly, we may also face increased competition following an acquisition of new lines of business that compete with providers of such technologies or from security vendors or other companies in adjacent markets extending their solutions into privilege access management. We may be at a competitive disadvantage to our privately-held competitors, as they may not face the same accounting, auditing and legal standards we do as a public company. Such privately-held competitors may face less public scrutiny than we do and may be less risk-averse than we are, and therefore may have greater operational flexibility.

 

Furthermore, an increasing number of independent industry analysts and researchers, regularly evaluate, compare and publish reviews regarding the functionality of IT security products, including ours. These reviews may significantly influence the market perception of our products, and our reputation and brand could be harmed if they publish negative reviews of our products or increasingly positive reviews of our competitors’ products, or do not view us as a market leader.

 

In addition, other IT security technologies exist or could be developed in the future by current or future competitors, and our business could be materially and adversely affected if such technologies are widely adopted. We may not be able to successfully anticipate or adapt to changing technology or customer requirements on a timely basis, or at all. If we fail to keep up with technological changes or to convince our customers and potential customers of the value of our solutions even in light of new technologies, our business, results of operations and financial condition could be materially and adversely affected.

If we are unable to increase sales of our solutions to new customers, our future results of operations may be harmed.

 

An important part of our growth strategy involves continued investment in direct marketing efforts, channel partner relationships, and infrastructure to add new customers. The number and rate at which new customers may purchase our products and services depends on a number of factors, including those outside of our control, such as customers’ perceived need for our solutions, competition, general economic conditions, market transitions, product obsolescence, technological change, shifts in buying patterns, the timing and duration of hardware refresh cycles, financial difficulties and budget constraints of our current and potential customers, public awareness of security threats to IT systems, and other factors. These new customers, if any, may renew their contracts with us and purchase additional solutions at lower rates than we have experienced in the past, which could affect our financial results.

We rely on large amounts of data from a variety of sources to support our solutions and the loss of access to or the rights to use such data could reduce the efficacy of our solutions and harm our business.

Like many of our industry peers, we leverage large amounts of data related to threats, vulnerabilities, cyberattacks, and other cybersecurity intelligence to develop and maintain a number of our products and services. We collect, develop and store portions of this data using third parties and our own technology. We cannot be assured that such third parties or our technology that support the collection, development or storage of such data, and the sources of such data itself, will continue to be effective or available and the loss or reduction in quality of such data may adversely impact the efficacy of our solutions. Changes in laws or regulations in the United States or foreign jurisdictions or the actions of governmental or quasi-governmental entities may increase the costs to collect, develop or store such data, partially or completely prohibit use of such, or could result in disclosure of such data to the public or other third parties, which may reduce its value to us or as part of our solutions and thereby harm our business.

 

We currently have a working capital deficit and negative cash flow from operations and are uncertain if and when we will be able to pay our current liabilities.

 

Our working capital deficit was approximately $2.9 million as of June 30, 2021. This deficit consists of $181,000 in current assets, offset by $3,018,000 in current liabilities. In addition, we had negative cash flow from operations for the year ended June 30, 2021 of approximately $793,000. We do not have any liquid or other assets that can be liquidated to pay our current liabilities while we continue to incur additional liabilities to our officer and certain service providers who are working to prepare the documents required to be filed with the Securities and Exchange Commission to enable our common shares to be registered for trading. Since we currently have limited operations, the only ways we have of paying our current liabilities are to issue our common or preferred shares to our creditors or to issue unsecured promissory notes which may include certain features such as convertibility into common or preferred shares or warrants to purchase additional common or preferred shares in the future.

  

We had $1,735,057 of convertible notes, notes payable, and accrued interest payable as of June 30, 2021, of which $622,260 of this amount is past due, and we do not have the funds necessary to pay these obligations.

 

In addition to funding our operating expenses, we need capital to pay various debt obligations totaling approximately $622,260 as of June 30, 2021 which are either currently past due or which are due in the current fiscal year. Currently, there is $471,974 principal amount of the convertible notes payable which is past due, $205,000 principal of the notes payable which is past due, and $341,717 of accrued interest which is past due. The interest on the past due principal amounts will continue to accrue monthly at their stated rates. Holders of past due notes do not have a security interest in our assets. The existence of these obligations provides additional challenges to us in our efforts to raise capital to fund our operations.

 

 

 

In the event we consummate a transaction with a profitable company, we may not be able to utilize our net operating loss carryover which may have a negative impact on your investment.

 

If we enter into a combination with a business that has operating income, we cannot assure you that we will be able to utilize all or even a portion of our existing net operating loss carryover for federal or state tax purposes following such a business combination. If we are unable to make use of our existing net operating loss carryover, the tax advantages of such a combination may be limited, which could negatively impact the price of our stock and the value of your investment. These factors will substantially increase the uncertainty, and thus the risk, of investing in our shares.

 

Economic conditions may affect our ability to obtain financing and to complete a merger or acquisition.

 

Due to general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will need. In the presence of these economic conditions, we may have difficulty raising sufficient capital to support the investigation of potential business opportunities, and to consummate a merger or acquisition. These factors substantially increase the uncertainty, and thus the risk, of investing in our shares.

 

In December 2019, a novel coronavirus (“COVID-19”) emerged and has subsequently spread worldwide. The World Health Organization has declared COVID-19 a pandemic resulting in federal, state, and local governments mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus.  The Delta variant of COVID-19, which appears to be the most transmissible and contagious variant to date, has caused a surge in COVID-19 cases globally. The impact of the Delta variant, or other variants that may emerge, cannot be predicted at this time, and could depend on numerous factors, including the availability of vaccines in different parts of the world, vaccination rates among the population, the effectiveness of COVID-19 vaccines against the Delta variant and other variants, and the response by governmental bodies to reinstate mandated business closures, orders to “shelter in place,” and travel and transportation restrictions.

 

As the COVID-19 pandemic is complex and rapidly changing, the full extent and duration of the impact of COVID-19 on the Company’s operation and financial performance is currently unknown and depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, its impact on capital and financial markets.

 

There are a number of factors related to our common stock which may have an adverse effect on our shareholders.

 

Shareholders’ interests in our Company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities. In the event that we are required to issue additional shares, enter into private placements to raise financing through the sale of equity securities or acquire business interests in the future from the issuance of shares of our common stock to acquire such interests, the interests of existing shareholders in our Company will be diluted and existing shareholders may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we do issue additional shares, it will cause a reduction in the proportionate ownership and voting power of all existing shareholders.

 

We have certain provisions in our Articles of Incorporation and Bylaws, and there are other provisions under Florida law, that may serve to make a takeover of our Company more difficult.

 

Provisions of our articles of incorporation and bylaws may delay or prevent a takeover which may not be in the best interests of our stockholders. Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer, or prevent a takeover attempt. In addition, certain provisions of Florida law also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation’s disinterested stockholders.

 

 

 

Voting power of our shareholders is highly concentrated by insiders.

 

Our officers and directors control, either directly or indirectly, a substantial portion of our voting securities. As of June 30, 2021, our executive officer and directors beneficially owns 662,294,903 shares of Common Stock, or approximately 22% of our outstanding shares of Common Stock. In addition, our executive officer owns the only issued and outstanding share of Series AA Convertible Preferred Stock which entitles him to 51% of the Common votes on any matter requiring a shareholder vote. Therefore, our management may significantly affect the outcome of all corporate actions and decisions for an indefinite period of time including the election of directors, amendment of charter documents and approval of mergers and other significant corporate transactions.

 

Our common stock is quoted in the over the counter market on the OTC Pink.

 

Our common stock is quoted on the OTC Pink. OTC Pink offers a quotation service to companies that are unable to list their securities on an exchange or for companies, such as ours, whose securities are not eligible for quotation on the OTC Bulletin Board. The requirements for quotation on the OTC Pink are considerably lower and less regulated than those of the OTC Bulletin Board or an exchange. Because our common stock is quoted on the OTC Pink, it is possible that even fewer brokers or dealers would be interested in making a market in our common stock which further adversely impacts its liquidity.

 

 

 

The tradability of our common stock is limited under the penny stock regulations which may cause the holders of our common stock difficulty should they wish to sell their shares.

 

Because the quoted price of our common stock is less than $5.00 per share, our common stock is considered a “penny stock,” and trading in our common stock is subject to the requirements of Rule 15g-9 under the Exchange Act. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser’s written consent prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a “penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities and this limited liquidity will make it more difficult for an investor to sell his shares of our common stock in the secondary market should the investor wish to liquidate the investment. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.

 

Our Share Price Is Volatile And May Be Influenced By Numerous Factors That Are Beyond Our Control.

 

Market prices for shares of technology companies such as ours are often volatile. The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including:

 

	●	fluctuations in digital currency and stock market prices and trading volumes of similar companies;
	●	general market conditions and overall fluctuations in U.S. equity markets;
	●	sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;
	●	discussion of us or our stock price by the press and by online investor communities; and
	●	other risks and uncertainties described in these risk factors.

 

We Have No Current Plans To Pay Dividends On Our Common Stock And Investors Must Look Solely To Stock Appreciation For A Return On Their Investment In Us.

 

We do not anticipate paying any further cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings to fund the development and growth of our business. Any payment of future dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the board of directors deems relevant. Investors may need to rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common stock.

 

 

Item 1B. Unresolved Staff Comments.

 

Not applicable.

 

Item 2. Properties.

 

Our principal offices are located at 4094 Majestic Lane, Suite 360, Fairfax, Virginia 22033.  We rent our principal executive office from an unrelated third party on an annual basis for $420 per year. We currently operate in a virtual office arrangement. Our telephone number is (703) 273-0383.

 

Item 3. Legal Proceedings.

 

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.

 

In January 2021 the Company won a dismissal of an involuntary bankruptcy petition that was filed against the Company in the Southern District Court of Florida on December 30, 2020, which had been brought by three parties, (i) Tarpon Bay Partners LLC, (ii) J.P. Carey Enterprises Inc., and (iii) Anvil Financial Mgmt LLC (collectively the "Petitioning Creditors").

 

The Court ruled in the Company's favor, dismissing the involuntary bankruptcy petition and allowing the Company to file a motion with the Court seeking compensatory and punitive damages. In addition, Visium plans to file an affidavit of fees and costs incurred in connection with Visium's defense of the Involuntary Petition.

 

In March 2021 the Company filed a Complaint for Damages and Other Relief against Tarpon Bay Partners, LLC, a Florida limited liability company; J.P. Carey Enterprises, Inc., a Florida profit corporation; Anvil Financial Management, LLC, a Florida limited liability company; Stephen Hicks, an individual; Joseph C Canouse, an individual; Jeffrey M. Canouse, an individual; Paul A. Rachmuth, an individual; and Litt Law Group, LLC, a New York Limited Liability Company (collectively the “Defendants”) related to the involuntary bankruptcy petition. The Company is seeking damages from the Defendants for reasonable attorneys’ fees and costs, as well as compensatory, consequential special and punitive damages.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

 

Our common shares are quoted on the OTC Pink Quotation System under the symbol “VISM,” but trade infrequently.

 

The high and low bid prices of our common stock for the periods indicated below are as follows:

 

Fiscal Year Ended June 30, 2021

	High		Low
Quarter Ended September 30, 2020	$0.0017		$0.0004
Quarter Ended December 31, 2020	$0.0109		$0.0004
Quarter Ended March 31, 2021	$0.0500		$0.0040
Quarter Ended June 30, 2021	$0.0188		$0.00595

 

Fiscal Year Ended June 30, 2020

	High		Low
Quarter Ended September 30, 2019	$0.1000		$0.0050
Quarter Ended December 31, 2019	$0.0160		$0.0015
Quarter Ended March 31, 2020	$0.0034		$0.0007
Quarter Ended June 30, 2020	$0.0020		$0.0002

 

 

Stockholders

 

As of September 30, 2021, there were 4,800 stockholders of record of our Common Stock.

 

Dividend Policy

 

We have not declared or paid any cash dividends on our common stock and do not anticipate declaring or paying any cash dividends in the foreseeable future. We currently expect to retain future earnings, if any, for the development of our business.

 

Recent Sales of Unregistered Securities

 

During the year ended June 30, 2021 the Company issued 524,543,160 shares of its common stock related to the conversion of $188,460 of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.00037 per share. The fair value of the shares issued was $2,422,722.

 

Stock Based Compensation and Stock Based Consulting Services Expense

 

During the year ended June 30, 2021 the Company issued 56,666,669 shares of its $0.0001 par value common stock to five consultants, as compensation for services rendered. The shares were valued at $354,000, or $0.0046 per share.

 

During the year ended June 30, 2021 the Company issued 220,000,000 shares of its $0.0001 par value common stock to our Directors and Officer, as compensation for services rendered. The shares were valued at $2,809,000, or $0.0128 per share.

 

Warrants

 

During the fiscal year ended June 30, 2021 the Company issued 375,934,483 shares of its $0.0001 par value common stock pursuant to the cashless exercise of warrants. The warrant shares were valued at $211,411, or 0.00061 per share.

 

All the securities described above were issued in transactions exempt from registration under the Securities Act, as transactions not involving a public offering, pursuant to Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder. The recipient of such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof

 

Funding

 

During the fiscal year ended June 30, 2021 the Company issued 225,000,000 shares of its $0.0001 par value common stock to four investors as commitment shares pursuant to the issuance of promissory notes.

 

Rule 10B-18 Transactions

 

During the year ended June 30, 2021, there were no repurchases of the Company’s common stock by the Company.

 

Item 6. Selected Financial Data.

 

As a “smaller reporting company”, we are not required to provide information required by this item.

 

 

 

 

 

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following information should be read in conjunction with our financial statements and accompanying notes included in this Annual Report on Form 10-K.

 

Overview

 

The Company 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 March 2019, the Company changed its name to Visium Technologies, Inc.

 

Since February 12, 2018 Mark Lucky has served as Chairman and CEO. He currently also serves as CFO. The Company’s headquarters is located at 4094 Majestic Lane, Suite 360, Fairfax, VA 22124. Since February 2018, the Company has focused on creating a world-class cybersecurity/digital risk management company, with a focus on network security, threat visualization, pinpoint threat identification, and big-data analytics. Our solutions address the growing security and compliance complexities and risks resulting from the increasing adoption of cloud computing and the proliferation of geographically dispersed IT assets.

 

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 is a military-grade highly scalable big data analytics tool for Cybersecurity, based on graph database technology. The development of the technology was sponsored by, and is currently in use by US Army Cyber Command. CyGraph provides advanced analytics for cybersecurity situational awareness that is scalable, flexible, and comprehensive. Visium has completed significant proprietary product development efforts to commercialize CyGraph. During fiscal 2021 the Company rebranded CyGraph as TruContextTM to reflect the enhanced version of the software tool which resulted from significant proprietary development of the software.

 

Results of Operations

 

Development Expense

 

For the year ended June 30, 2021, development expense totaled $258,168 as compared to $35,500 for the year ended June 30, 2020, an increase of $222,668 or approximately 627%.

 

Selling, General, and Administrative Expenses

 

For the year ended June 30, 2021, selling, general and administrative expenses were $3,879,158 as compared to $917,993 for the year ended June 30, 2020, an increase of $2,961,165 or approximately 322.6%. For the years ended June 30, 2021 and 2020 selling, general and administrative expenses consisted of the following:

 

		2021				2020				Increase/ (Decrease)				% Change
Accounting expense		$	50,305			$	5,581			$	44,724				56.3	%
Consulting fees			56,455				103,800				(47,345	)			(157.8	%)
Salaries			374,000				336,000				38,000				11.3	%
Legal and professional fees			144,180				59,550				84,630				142.1	%
Travel expense			1,459				9,786				(8,327	)			(85.1	%)
Occupancy expense			369				4,719				(4,350	)			(92.2	%)
Telephone expense			3,630				3,600				30				0.8	%
Marketing expense			5,877				8,199				(2,322	)			(28.3	%)
Website expense			6,284				2,951				3,333				112.9	%
Investor relations expense			15,000				20,000				(5,000	)			(25.0	%)
Stock based consulting expense			372,553				198,735				173,818				87.5	%
Stock based compensation			2,809,000				148,000				2,661,000				1798.0	%)
Other			40,046				17,072				22,974				134.6	%
		$	3,879,158			$	917,993			$	2,961,165				322.6	%

 

The increase in selling, general and administrative expenses during fiscal 2021, when compared with the prior year, is primarily due to an increase in stock-based compensation, legal expenses, and salaries, offset by increases in accounting expenses.

 

 

 

 

 

Change in Fair Value of Derivative Liability

 

		Years ended
		June 30,
		2021				2020
Gain on change in fair value of derivative liabilities		$	1,844,460			$	385,367

 

Changes in fair value of derivative liabilities results from the changes in the fair value of the derivative liability due to the application of ASC 815, resulting in either income or expense, depending on the difference in fair value of the derivative liabilities between their measurement dates. The increase in fair value of derivative liabilities recognized during fiscal 2021 is primarily due to a change in accounting estimate related to the accounting for derivative liabilities as a result of a decrease in share price.

 

Derivative Liability Expense

 

		Years Ended
		June 30,								%
		2021				2020				Change
Derivative liability expense		$	1,059,282			$	61,396				1,625.3	%

 

The Company issued convertible notes in January 2021 and June 2021 which provisions contained variable price conversion terms, resulting in a derivative liability expense, measured as of the issuance date of the notes.

 

Interest Expense

 

		Years Ended
		June 30,								%
		2021				2020				Change
Interest Expense		$	442,167			$	323,021				36.9	%

 

Interest expense represents the stated interest of notes and convertible notes payable as well as the amortization of debt discount. The increase in interest expense during fiscal 2021 is primarily due to higher amortization of debt discount of $99,250.

 

 

Gain on Debt Write-Off

 

		Years Ended
		June 30,
		2021				2020
Gain (loss) on debt write off/conversions		$	607,271			$	(593,907	)

 

In June 2021 the Company obtained a legal opinion to extinguish aged debt totaling $787,272 as detailed in the following table. Each of the individual debt instruments were determined to be beyond the statute of limitations and it was determined that the Company has a complete defense to liability related to this debt under the applicable statute of limitations.

 

Accrued interest payable		$	385,803
Convertible notes payable			401,469
		$	787,272

 

Liquidity and Capital Resources

 

		Balance at June 30,
		2021				2020
Cash		$	125,166			$	30,251
Accounts payable and accrued expenses			(425,804	)			(333,805	)
Accrued compensation			(672,529	)			(652,529	)
Notes, convertible notes, and accrued interest		$	(1,735,057	)		$	(1,883,784	)

 

At June 30, 2021 our total assets consisted of cash and prepaid license fees. At June 30, 2020 our total assets consisted entirely 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 were unable to generate sufficient funds from operations to fund our ongoing operating requirements through June 30, 2021. As of September 30, 2021, we had approximately $1.0 million on hand. 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 equity 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.

 

 

 

 

 

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 $792,640 and $106,757 during the years ended June 30 2021 and 2020, respectively, and has a working capital deficit of approximately $2.8 million and $3.4 million at June 30, 2021 and 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.

 

		Years Ended
		June 30,
		2021				2020
Cash flows from operating activities:
Net loss		$	(3,373,459	)		$	(1,542,450	)
Non-cash Adjustments:
(Gain) loss on debt settlement and write off expense			(607,271	)			593,907
Stock based compensation			3,163,000				346,735
Amortization of debt discount			305,499				206,249
Derivative liability expense			1,059,282				61,396
(Gain) loss on change in derivative liability			(1,844,460	)			(385,367	)
Warrant conversion expense			211,411				-
Changes in assets and liabilities
Accrued interest			96,007				145,941
Accrued compensation			20,000				336,000
Accounts payable and accrued expenses			445,850				130,832
Prepaid license fees			(55,417	)			-
Discount on note payable			(213,082	)			-
Net cash used in operations			(792,640	)			(106,757	)
Cash flows from financing activities:
Advance from officers, net			(102,340	)			40,340
Repayment of convertible notes payable			(73,700	)			-
Proceeds from issuance of short term notes payable			225,000				-
Proceeds from issuance of convertible notes payable, net of debt issuance costs			838,595				78,000
Net cash provided by financing activities			887,555				118,340
Net increase in cash		$	94,915			$	11,583

 

 

 

Year ended June 30, 2021

 

Net cash used in operations in fiscal year 2021 increased by $685,883 or 646% from fiscal year 2020. This cash was obtained through the sale of three convertible notes that netted the Company $838,595, and from the sale of three short term notes payable that netted the Company $225,000.

 

Year ended June 30, 2020

 

Net cash used in operations in fiscal year 2020 decreased by $459,987 or 81% from fiscal year 2019. This increase in cash was due to the sale of three convertible notes that netted the Company $78,000, and through advances of cash made to the Company by its officers and directors of $40,340.

 

Capital Raising Transactions

 

Issuance of Convertible Notes Payable

 

We generated net proceeds of $838,595 and $78,000 during fiscal 2021 and 2020, respectively, from the issuance of convertible notes payable. We generated net proceeds of $225,000 during fiscal 2021 from the issuance of short term notes payable.

 

 

 

Convertible Notes Payable

 

The Company had convertible promissory notes aggregating approximately $809,000 and $853,000 outstanding at June 30, 2021 and 2020, respectively. The accrued interest amounted to approximately $163,000 and $503,000 at June 30, 2021 and 2020, respectively. There is no provision in the note agreements for adjustments to the interest rates on these notes in the event of default. The convertible notes payable bear interest at rates ranging between 10% and 18% per annum. Interest is generally payable monthly. The Convertible Notes Payable are generally convertible at rates ranging between $0.0002 and $22,500 per share, at the holders’ option. At June 30, 2021, all convertible promissory notes have matured.

 

		Balance at				Balance at
		June 30, 2021				June 30, 2020
Convertible notes payable		$	1,205,228			$	852,962
Discount on convertible notes			(396,033	)			-
Notes payable, net of discount		$	809,195			$	852,962

 

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 approximately $430,000 at June 30, 2021 and $205,000 at June 30, 2020. The related accrued interest amounted to approximately $203,400 and $175,000 at June 30, 2021 and 2020, respectively. There is no provision in the note agreements for adjustments to the interest rates on these notes in the event of default. The notes payable bear interest at rates of 16% per annum. Interest is generally payable monthly. $205,000 of these notes have matured as of June 30, 2021.

 

Common Stock Warrants

 

In January and February 2021, we issued 39,370,677 warrants with a two year life, and fixed exercise prices ranging from $0.0055 to $0.02 per share. An additional 9,239,130 warrant shares were issued due to repricing certain warrants with a $0.02 exercise price to a $0.0115 exercise price.

 

In January 2019 we issued 500,000 warrants with a three year life and a conversion price of $0.15 per share. These warrants had 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.

 

The holders of the warrants issued in 2019 exercised all of their warrants on a cashless basis, during the three months ended December 31, 2020. Due to the price protection features of these warrants, the Company issued 374,500,000 warrant shares to these warrant holders.

 

A summary of the status of the Company’s outstanding common stock warrants as of June 30, 2021 and changes during the fiscal year 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	46,838,209	$0.011
Granted due to repricing	347,761,534	0.0002
Exercised	(375,934,483)	0.0002
Forfeited	(7,000,000)	0.0002
Balance at end of period	12,165,260	$0.011
Warrants exercisable at end of period	12,165,260	$0.011
Weighted average fair value of warrants granted due to repricing during the period		$72,992

 

Derivative Liability

 

The Company recognizes all derivative financial instruments on its balance sheet at fair value.

 

 

Current and Future Impact of COVID-19

 

The COVID-19 pandemic continues to have a material negative impact on capital markets. While we continue to incur operating losses, we are currently dependent on debt or equity financing to fund our operations and execute our business plan. We believe that the impact on capital markets of COVID-19 may make it more costly and more difficult for us to access these sources of funding.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Climate Change

 

Our opinion is that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.

 

Critical Accounting Policies

 

We have identified the policies below as critical to our understanding of the results of our business operations. We discuss the impact and any associated risks related to these policies on our business operations throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results.

 

In the ordinary course of business, we have made a number of estimates and assumptions in preparing our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Actual results could differ significantly from those estimates and assumptions. The following critical accounting policies are those that are most important to the portrayal of our consolidated financial statements. For a summary of our significant accounting policies, including the critical accounting policies discussed below, refer to Note 2 - “Summary of Significant Accounting Policies” included in the notes to consolidated financial statements for the year ended June 30, 2021 included elsewhere in this Annual Report on Form 10-K.

 

We consider the following accounting policies to be those most important to the portrayal of our results of operations and financial condition:

 

Revenue Recognition

 

We recognize revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

 

The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. In the event any discounts, sales incentives, or similar arrangements are agreed to with a customer, such amounts are estimated at time of sale and deducted from revenue. Sales taxes and other similar taxes are excluded from revenue.

 

Convertible Instruments - The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with 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 in accordance with EITF 00-19. 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 that term is described).

 

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 the provisions of ASC 470 20 “Debt with Conversion 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 when necessary 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.

 

The Company believes the certain conversion features embedded in convertible notes payable are not clearly and closely related to the economic characteristics of the Company’s stock price. Accordingly, the Company has recognized derivative liabilities in connection with such instruments. The Company uses judgment in determining the fair value of derivative liabilities at the date of issuance at every balance sheet thereafter. The Company uses judgment in determining which valuation is most appropriate for the instrument (e.g., Cox, Ross & Rubinstein Binomial Tree valuation model), the expected volatility, the implied risk-free interest rate, as well as the expected dividend rate.

 

 

 

Share-Based Compensation

 

We compute share based payments in accordance with the provisions of ASC Topic 718, Compensation – Stock Compensation and related interpretations. As such, compensation cost is measured on the date of grant at the fair value of the share-based payments. Such compensation amounts, if any, are amortized over the respective vesting periods of the grants.

 

Restricted stock awards are granted at the discretion of the compensation committee of our board of directors (the “Board of Directors”). These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of our common stock on the grant date.

 

We estimate the fair value of stock options and warrants by using the Cox, Ross & Rubinstein Binomial Tree model. The Cox, Ross & Rubinstein valuation model requires the development of assumptions that are inputs into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of our common stock over the expected term of the option. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term.

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. We are required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest.

 

We account for share–based payments granted to non–employees in accordance with ASC 505–50, “Equity Based Payments to Non–Employees.” We determine the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more readily determinable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

 

Derivative Instruments

 

We enter into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. We recognize derivative instruments as either assets or liabilities in the balance sheet and measure such derivative instruments at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The fair values of derivative financial instruments are estimated using various techniques (and combinations thereof) that are considered consistent with the objective measuring fair values. In selecting the appropriate technique, the nature of the instrument, the market risks that it embodies and the expected means of settlement are considered. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as the Cox, Ross & Rubinstein model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimates and assumption changes.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

Item 8. Financial Statements and Supplementary Data.

 

The information required by this item is included in Item 15 of this Annual Report on Form 10-K.

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer, who at June 30, 2021 was also our principal executive and financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, our Chief Executive Officer concluded that, as of June 30, 2021, our disclosure controls and procedures were not effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our Chief Executive Officer to allow timely decisions regarding required disclosure.

 

 

 

 

Management Report on Internal Control over Financial Reporting

 

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 June 30, 2021. 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 June 30, 2021, 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; and
	●	Our Board of Directors consists 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, concluded that our internal control over financial reporting was not effective as of June 30, 2021.

 

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

 

There was no change in our internal control over financial reporting during the fiscal quarter ended June 30, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information

 

None.

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

 

The following table sets forth the names, ages and principal position of our executive officers and directors as of June 30, 2021:

 

 

Name		Age		Position
Mark Lucky		62		Chairman of the Board, Chief Executive Office, Chief Financial Officer
Thomas Grbelja (1)(2)		62		Director
Emmanuel Esaka, MD		48		Director
Paul Favata (1)(2)		56		Director

 

(1) Member of the Compensation Committee

(2) Member of the Audit Committee

 

Mr. Mark Lucky has served as the Company’s Chief Executive Officer, Treasurer, Secretary, and Chairman of the Company’s Board of Directors since February 2019. Mr. Lucky has been a certified public accountant and has more than 15 years of experience serving as a public company chief financial officer. His professional experience includes working with start-ups, development-stage and mature companies in a wide variety of industries. From May 2014 until February 2019 Mr. Lucky has worked as a consultant to various public and private companies, including Visium Technologies, Inc., Intelligent Living America, Inc. (OTCBB: ILIV), and Ronn Motor Group, Inc. Prior to that, Mr. Lucky served as the CFO for IceWeb Inc. (OTCBB: IWEB) from March 2007 to May 2014. From 2004 to 2005 he served as Vice President of Finance and Administration at Galt Associates, Inc., a Sterling, Virginia informatics/ technology and medical research services company and from 2001 to 2004 he was Vice President of Finance and Administration of MindShare Design, Inc., a San Francisco, California based internet technology company. During his career Mr. Lucky has also been employed by Axys Pharmaceuticals, Inc (NASDAQ: AXPH) a San Francisco, California-based early stage drug discovery biotech company, PriceWaterhouseCoopers, LLC, COMPASS Management and Leasing, Inc., Mindscape, Inc., The Walt Disney Company and KPMG. Mr. Lucky formerly served as a member of the board of directors of Intelligent Living America, Inc., VOIS Inc. and HASCO Medical, Inc. Mr. Lucky received a B.A. degree in Economics from the University of California, Los Angeles.

 

We believe that Mr. Lucky’s extensive senior management and operational experience brings valuable knowledge to our board of directors and that these experiences, qualifications, and attributes have led to our conclusion that Mr. Lucky should be serving as a member of our board of directors.

 

Mr. Thomas Grbelja previously served as a director of Realbiz Media Group, Inc. (OTCBB: RBIZ), and served as their Chief Financial Officer from June 19, 2015 to January 2, 2017. Mr. Grbelja has spent over 30 years as a Certified Public Accountant providing a wide variety of professional accounting, tax and financial consulting services to professional service, manufacturing, and construction industry participants. Since 1990 he has served as the President and a Founding Member of Burke Grbelja & Symeonides, LLC, Certified Public Accountants, an accounting firm based in Rochelle Park, New Jersey. In addition, between 1983 and 1990, Mr. Grbelja worked as an accountant at Coopers & Lybrand, where he was responsible for the overall audit engagement, including filings with the SEC, for certain large, publicly traded companies. He received his undergraduate degree in accounting at Fairleigh Dickinson University and is a Certified Public Accountant.

 

Based on his business experience the Company believes that Mr. Grbelja is well-qualified to serve on the Company’s Board of Directors.

 

Mr. Paul Favata is a 29-year Wall Street veteran who began his career on the American Stock Exchange (AMEX), working for two smaller member firms, before moving to the New York Stock Exchange (NYSE). After five years with one of the largest specialist firms on the floor, Mr. Favata left the exchange in 1992 to work on the sell-side. Mr. Favata spent the bulk of the 1990’s with a small boutique firm working in both the retail and institutional sales areas. Mr. Favata held the position of Senior Vice President of Finance at a small, privately held consulting firm that advised clients on acquisitions and long-term financing strategies. Since 2008, Mr. Favata has held various C-level executive positions including as Chief Financial Officer of a $60 million annual revenue telecom provider having management oversight and responsibility for all financial functions while overseeing all revenues, costs, capital expenditures, investments, and debt. Most recently, President of a publicly traded company specializing in the acquisition and integration of IT and Cloud Technology service providers and Internet and web technologies. Mr. Favata resides, with his family, in Saint Petersburg, Florida.

 

We believe that Mr. Favata’s extensive senior management and operational experience brings valuable knowledge to our board of directors and that these experiences, qualifications, and attributes have led to our conclusion that Mr. Favata should be serving as a member of our board of directors.

 

Dr. Emmanuel Esaka. Dr. Esaka brings decades of experience as a successful surgeon. He has earned an MBA from Auburn University, and graduated Cum Laude with Highest Honors from Università Degli Studi di Bologna, Italy School of Medicine and Surgery. He is the Founder, Owner, and CEO of Advanced Care Obstetrics and Gynecology PA in Wilmington, Delaware, Co-Founder and Managing Director of 3N Pharma USA, Inc., Founder and CEO of Cameroon American Health System, Inc., and Co-Founder of Caritas Home Health Services, Inc. Dr. Osaka also served as attending obstetrics and gynecology at Irwin Army Community Hospital, and serves as a Director of Meiger Health, Inc.

 

We believe that Dr. Esaka’s extensive experience and business background adds valuable knowledge to our board of directors and that these experiences, qualifications, and attributes have led to our conclusion that Dr. Esaka should be serving as a member of our board of directors.

 

There are no family relationships among our directors or executive officers.

  

 

 

Corporate Governance

 

Directors are elected at the annual stockholder meeting or appointed by our Board of Directors and serve for one year or until their successors are elected and qualified. When a new director is appointed to fill a vacancy created by an increase in the number of directors, that director holds office until the next election of one or more directors by stockholders. Officers are appointed by our Board of Directors and their terms of office are at the discretion of our Board of Directors.

 

Director Compensation

 

We compensate the Directors with stock as compensation for board services.

 

Committees of the Board of Directors

 

Our Board of Directors has established an Audit Committee, and a Compensation Committee, and meet as a whole to fulfill the functions of the Nominating Committee.

 

Audit Committee. Mr. Favata and Mr. Grbelja are members of the Audit Committee. The Audit Committee of our Board of Directors was formed to assist the Board of Directors in fulfilling its oversight responsibilities for the integrity of our consolidated financial statements, compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and the performance of our internal audit function and independent auditors. The Audit Committee will also prepare the report that SEC rules require be included in our annual proxy statement. The Audit Committee has adopted a charter which sets forth the parameters of its authority The Audit Committee Charter provides that the Audit Committee is empowered to:

 

 

	●	Appoint, compensate, and oversee the work of the independent registered public accounting firm employed by our company to conduct the annual audit. This firm will report directly to the audit committee;
	●	Resolve any disagreements between management and the auditor regarding financial reporting;
	●	Pre-approve all auditing and permitted non-audit services performed by our external audit firm;
	●	Retain independent counsel, accountants, or others to advise the committee or assist in the conduct of an investigation;
	●	Seek any information it requires from employees - all of whom are directed to cooperate with the committee’s requests - or external parties;
	●	Meet with our officers, external auditors, or outside counsel, as necessary; and
	●	The committee may delegate authority to subcommittees, including the authority to pre-approve all auditing and permitted non-audit services, provided that such decisions are presented to the full committee at its next scheduled meeting.

 

Each Audit Committee member is required to:

 

	●	satisfy the independence requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934, and all rules and regulations promulgated by the SEC as well as the rules imposed by the stock exchange or other marketplace on which our securities may be listed from time to time, and
	●	meet the definitions of “non-employee director” for purposes of SEC Rule 16b-3 and “outside director” for purposes of Section 162(m) of the Internal Revenue Code.

 

Each committee member is required to be financially literate and at least one member is to be designated as the “financial expert,” as defined by applicable legislation and regulation. No committee member is permitted to simultaneously serve on the audit committees of more than two other public companies. As we expand our Board of Directors with additional independent directors the number of directors serving on the Audit Committee will also increase.

 

A copy of the Audit Committee Charter is available on our website at www.visiumtechnologies.com under “Investor Relations”.

 

Compensation Committee. Mr. Favata and Mr. Grbelja are members of the Compensation Committee. The Compensation Committee was appointed by the Board to discharge the Board’s responsibilities relating to:

 

	●	compensation of our executives,
	●	equity-based compensation plans, including, without limitation, stock option and restricted stock plans, in which officers or employees may participate and
	●	arrangements with executive officers relating to their employment relationships with our company, including employment agreements, severance agreements, supplemental pension, or savings arrangements, change in control agreements and restrictive covenants.

The Compensation Committee has adopted a charter. The Compensation Committee charter provides that the Compensation Committee has overall responsibility for approving and evaluating executive officer compensation plans, policies, and programs of our company, as well as all equity-based compensation plans and policies. In addition, the Compensation Committee oversees, reviews, and approves all of our ERISA and other employee benefit plans which we may establish from time to time. The Compensation Committee is also responsible for producing an annual report on executive compensation for inclusion in our proxy statement and assisting in the preparation of certain information to be included in other periodic reports filed with the SEC.

 

  Each Compensation Committee member is required to:

 

	●	satisfy the independence requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934, and all rules and regulations promulgated by the SEC as well as the rules imposed by the stock exchange or other marketplace on which our securities may be listed from time to time, and
	●	meet the definitions of “non-employee director” for purposes of SEC Rule 16b-3 and “outside director” for purposes of Section 162(m) of the Internal Revenue Code.

 

 

 

 

Pursuant to our Compensation Committee Charter, the Compensation Committee is charged with evaluating and recommending for approval by the Board of Directors the compensation of our executive officers. In addition, the Compensation Committee also evaluates and makes recommendations to the entire Board of Directors regarding grants of options which may be made as director compensation. The Compensation Committee does not delegate these authorities to any other persons, nor does it use the services of any compensation consultants.

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.

 

To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations that no other reports were required to be filed during fiscal 2020, we believe that for fiscal 2021, all required reports were filed on a timely basis under Section 16(a), except for Dr Esaka, who had not yet filed his initial Form 3 or subsequent Form 4 and Form 5.

 

Code of Ethics

 

We have adopted a Code of Ethics and Business Conduct to provide guiding principles to our principal executive officer, principal financial officer, and principal accounting officer or controller of our company in the performance of their duties. Our Code of Ethics and Business Conduct also strongly recommends that all directors and employees of our company comply with the code in the performance of their duties. Our Code of Ethics and Business Conduct provides that the basic principle that governs all of our officers, directors and employees is that our business should be carried on with loyalty to the interest of our stockholders, customers, suppliers, fellow employees, strategic partners and other business associates. We believe that the philosophy and operating style of our management are essential to the establishment of a proper corporate environment for the conduct of our business.

 

Generally, our Code of Ethics and Business Conduct provides guidelines regarding:

 

	●	conflicts of interest,
	●	financial reporting responsibilities,
	●	insider trading,
	●	inappropriate and irregular conduct,
	●	political contributions, and
	●	compliance with laws.

 

 

 

Item 11. Executive Compensation.

 

The following table sets forth, for the last two completed fiscal years, all compensation paid, distributed or accrued for services rendered to us by (i) all individuals serving as our principal executive officer or acting in a similar capacity during the last completed fiscal year, regardless of compensation level; (ii) our two most highly compensated executive officers other than the principal executive officer who were serving as executive officers at the end of the last completed fiscal year and whose total compensation exceeded $100,000; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to (ii) above but for the fact that the individual was not serving as our executive officer at the end of the last completed fiscal year:

 

 

 

Summary Compensation Table

 

Name and Principal Position		Year		Salary ($)(1)				Bonus ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Non-Qualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Mark Lucky (1)		2021			374,000				-				1,906,000																			$	2,280,000
Chief Executive Officer and Chief Financial Officer		2020			336,000				-				87,000																				423,000

 

(1)

Amounts includes accrued compensation for Mr. Lucky. Actual amounts paid to Mr. Lucky were $354,000 and $0 for 2021 and 2020, respectively.

 

 

Employment Agreements

 

Currently no employees are party to any employment agreement with the Company. We anticipate that as we complete certain acquisition transactions, the Company will enter into employment agreements with key executives.

 

Pension, Retirement or Similar Benefit Plans

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our Board in the future.

 

Outstanding Equity Awards at Fiscal Year-End

The following table provides information concerning equity incentive plan awards for each named executive officer outstanding as of June 30, 2021:

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

STOCK AWARDS

Equity

Equity

Incentive

Incentive

Plan

Market

Plan

Awards:

Number

Value

Awards:

Market

of

of

Number

or Payout

Shares

Shares

of

Value of

or

or

Unearned

Unearned

Units

Units

Shares,

Shares,

of

of

Units or

Units or

Stock

Stock

Other

Other

That

That

Rights

Rights

Have

Have

That

That

Not

Not

Have Not

Have Not

Vested

Vested

Vested

Vested

Name

(#)

($)

(#)

(#)

(a)

(g)

(h)

(i)

(j)

Mark Lucky

60,000,000

$

360,000

-

-

 

Director Compensation

 

Our Board of Directors is comprised of Mr. Paul Favata, Mr. Tom Grbelja, Dr. Emmanuel Esaka, and Mr. Mark Lucky, who is also an executive officer of our company. In March 2021 Messrs. Favata and Grbelja each received restricted stock grants as compensation for their Board services.

 

The following table sets forth the restricted stock grants issued to Messrs. Favata, Grbelja, and Dr. Esaka as compensation for their Board service:

 

		FY2021								FY2020
		Common Shares								Common Shares
Name		Granted/Vested				Expense				Granted/Vested				Expense
Tom Grbelja			76,000,000			$	857,000				58,000,000			$	43,000
Paul Favata			2,000,000				23,000				20,000,000				6,000
Emmanuel Esaka			2,000,000				23,000				40,000,000				12,000
			80,000,000			$	903,000				118,000,000			$	61,000

 

 

 

 

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters.

 

At September 30, 2021, we had 3,512,404,577 shares of our Common Stock outstanding. The following table sets forth information regarding the beneficial ownership of our Common Stock as of September 30, 2021, 2020 by:

 

 

●	each person known by us to be the beneficial owner of more than 5% of our Common Stock;
●	our director;
●	each of our executive officers named in the compensation tables in Item 11; and
●	all of our executive officers and director as a group.

 

 

Amount and Nature of Beneficial Ownership
		COMMON STOCK								Series AA Preferred Stock Ownership
		AMOUNT OF								AMOUNT OF								% OF VOTING
		BENEFICIAL				% OF				BENEFICIAL				% OF				CONTROL
NAME		OWNERSHIP				CLASS				OWNERSHIP				CLASS				(1)
Mark Lucky			419,622,464				11.57	%			1				100	%			57.18	%
Tom Grbelja			147,969,860				4.08	%											2.10	%
Emmanuel Esaka			99,672,438				2.75	%											1.38	%
Paul Favata			28,833,334				0.79	%											0.42	%
Officers and directors as a group			696,098,096				19.19	%			1				100	%			61.08	%
Total			696,098,096				19.19	%			1				100	%			61.08	%

 

(1)

Percent of Voting Control is based upon the number of outstanding shares of our common stock and our Series AA Preferred Stock as of September 30, 2021, 2020. On that date, we had 3,512,404,577 outstanding shares of common stock with one vote per share, and 1 share of Series AA Preferred Stock outstanding with voting rights equal to 51% of the outstanding common shares.

 

The following table sets forth securities authorized for issuance under any equity compensation plans approved by our stockholders as well as any equity compensation plans not approved by our stockholder as of June 30, 2021.

 

 

Plan category		Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted-average exercise price of outstanding options, warrants and rights (b)				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders
2021 Employee Stock Compensation Plan			16,000,000			$	0.015				104,000,000
Equity compensation plans not approved by security holders			-				-				-
Total			16,000,000			$	0.015				104,000,000

 

Item 13. Certain Relationship and Related Party Transactions, and Director Independence.

 

Other than compensation arrangements, we describe below, transactions during our last fiscal year, to which we were a party, in which:

 

	●	The amounts involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years; and
	●	Any of our directors, executive officers, or holders of more than 5% of our common stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.

 

 

 

 

 

Common Stock

 

Issuances of Common Stock During Fiscal 2021

 

During fiscal 2021 we issued shares of our common stock as follows:

 

Convertible Notes Payable

 

During the year ended June 30, 2021 the Company issued 524,543,160 shares of its common stock related to the conversion of $188,460 of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.00037 per share. The fair value of the shares issued was $2,422,722.

 

Sale of Restricted Common Stock

 

During the year ended June 30, 2021, the Company issued 225,000,000 commitment shares related to convertible note transactions, with 4 investors.

 

Stock Based Compensation

 

During the year ended June 30, 2021 the Company issued 220,000,000 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $2,809,000, or $0.013 per share, based on the share price at the time of the transactions.

 

During the year ended June 30, 2021 the Company issued and vested 56,666,669 shares of its $0.0001 par value common stock to three consultants, as compensation under three separate consulting agreements. The shares were valued at $354,000, or $0.001 per share, based on the share price at the time of the transactions.

 

Issuances of Common Stock During 2020

 

During fiscal 2020 we issued shares of our common stock as follows:

 

Convertible Notes Payable

 

During the year ended June 30, 2020 the Company issued 954,210,518 shares of its common stock related to the conversion of $333,219 of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.0003 per share. The fair value of the shares issued was $1,059,572, resulting in a loss on debt settlement of $593,907.

 

Sale of Restricted Common Stock

 

None.

 

Stock Based Compensation

 

During the year ended June 30, 2020 the Company issued 348,000,000 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $148,000, or $0.00043 per share, based on the share price at the time of the transactions.

 

During the year ended June 30, 2020 the Company issued and vested 199,850,000 shares of its $0.0001 par value common stock to four consultants, as compensation under four separate consulting agreements. The shares were valued at $198,735, or $0.001 per share, based on the share price at the time of the transactions.

 

 

Director Independence

 

Although our common stock is not listed on any national securities exchange, for purposes of independence we use the definition of independence applied by The Nasdaq Stock Market. The Board has determined that each of Paul Favata, Tom Grbelja, and Dr. Emmanuel Esaka are “independent” in accordance with such definition.

 

Item 14. Principal Accountant Fees and Services

 

During the two most recent fiscal years and through the Engagement Date, neither the Company, nor any one on its behalf, consulted with Assurance Dimensions, Inc. in regard to the application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, or any other matters or reportable events as defined in Item 304(a)(2)(i) and (ii) of Regulation S-K.

 

The following table summarizes the fees of Assurance Dimensions, Inc., our independent registered public accounting firm billed for each of the last two fiscal years for audit services and other services:

 

 

Fee Category		2021				2020
Audit Related Fees Paid to Assurance Dimensions, Inc. (1)		$	35,500			$	30,000
Tax Fees (2)			-				-
All Other Fees			-				-
Total Fees		$	35,500			$	30,000

 

(1) Consists of fees for professional services rendered in connection with the financial statements included in our Annual Report on Form 10-K and quarterly reports on Form 10-Q.

 

(2) Consists of fees relating to any tax compliance and tax planning.

PART IV

 

Item 15. Exhibits and Financial Statement Schedules

 

a. Index to Financial Statements and Financial Statement Schedules

 

Item 16. Form 10-K Summary.

 

Not Applicable.

 

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of June 30, 2021 and 2020	F-3
Consolidated Statements of Operations for each of the two years in the period ended June 30, 2021	F-4
Consolidated Statements of Changes in Stockholders’ Deficit for each of the two years in the period ended June 30, 2021	F-5
Consolidated Statements of Cash Flows for each of the two years in the period ended June 30, 2021	F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-7 - F-21

 

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions, or are inapplicable, and therefore have been omitted.

 

b. Exhibits

 

 

Exhibit No.		Description of Exhibit
2.1		Merger Agreement Between Jaguar Investments, Inc., Freight Rate, Inc., and Jag2 Corporation (1)
2.2		Agreement and Plan of Merger by and among Fittipaldi Logistics, Inc., State Petroleum Acquisition Corp. and State Petroleum Distributors, Inc. (30)
2.3		Membership Interest Purchase Agreement by and among Threat Surface Solutions Group, LLC, Acquired Data Solutions, Inc., Ramparts, LLC, and Kevin Anderson, an Individual, and Visium Technologies, Inc. (36)
2.4		First Amendment to Membership Interest Purchase Agreement by and among Threat Surface Solutions Group LLC, Acquired Data Solutions, Inc., Ramparts, LLC, and Kevin Anderson, an Individual, and Visium Technologies, Inc. (37)
3.1		Articles of Incorporation of Jaguar Investments, Inc. (2)
3.2		Certificate of Amendment to Articles of Incorporation (3)
3.3		Certificate of Amendment to the Articles of Incorporation (4)
3.4		Certificate of Voting Powers, Designations, Preferences and Rights to Series B Convertible Preferred Stock (10)
3.5		Certificate of Voting Powers, Designations, Preferences and Rights to Series C Convertible Preferred Stock (10)
3.6		Certificate of Voting Powers, Designations, Preferences and Rights to Series Y Preferred Stock (5)
3.7		Certificate of Correction of Certificate of Voting Powers, Designations, Preferences and Right to Series Y Preferred Stock (5)
3.8		Certificate of Amendment to Articles of Incorporation Increasing Authorized Shares of Common Stock to 250,000,000 filed on August 13, 2004 (9)
3.9		Certificate of Voting Powers, Designations, Preferences and Rights to Preferred Stock of Series X Convertible Preferred Stock (5)
3.10		Bylaws (2)
3.11		Amended Bylaws dated March 31, 2003 (5)
3.12		Certificate to Set Forth Designations, Preferences and Rights to Series D Convertible Preferred Stock (23)
3.13		Certificate to Set Forth Designations, Preferences and Rights to Series E Convertible Preferred Stock (29)
3.14		Certificate to Set Forth Designations, Preferences and Rights to Series F Convertible Preferred Stock (29)
3.15		Certificate to Set Forth Designations, Preferences and Rights to Series G Convertible Preferred Stock (29)
3.16		Certificate to Set Forth Designations, Preferences and Rights to Series H Convertible Preferred Stock (29)
3.17		Certificate to Set Forth Designations, Preferences and Rights to Series I Convertible Preferred Stock (29)
3.18		Certificate to Set Forth Designations, Preferences and Rights to Series J Convertible Preferred Stock (35)
4.1		Form of Common Stock Purchase Warrant to Newbridge Securities Corporation for Business Advisory Agreement (10)
4.2		Form of 14.25% secured convertible debenture (35)
4.3		$100,000 principal amount promissory note pursuant to settlement agreement with Stokes Logistics Consulting, LLC (35)

 

 

 

  

4.4		$100,000 principal amount 8% secured convertible promissory note (35)
4.5		Letter of agreement dated February 8, 2008 evidencing $25,000 principal promissory note to Canberra Financial Services II, Inc. (35)
4.6		$14,000 principal 12.5% promissory note for services (35)
4.7		Form of unsecured promissory note (35)
4.8		Form of non-plan option agreement (10)
4.9		Form of common stock purchase warrant (10)
4.10		Form of Common Stock Purchase Warrant re: 14.25% secured convertible debentures (10)
4.11		Form of Common Stock Purchase Warrant issued to Newbridge Securities Corporation as Placement Agent for 14.25% secured convertible debentures (10)
4.12		Form of Series C 10% unsecured convertible debenture (20)
4.13		Form of Warrant for Series C 10% unsecured convertible debenture offering (35)
4.14		Form of Series D 8% unsecured convertible debenture (35)
4.15		Form of 10% convertible debenture (35)
4.16		Form of Warrant for Series D 8% unsecured convertible debenture (22)
4.17		Articles of Merger between Power2Ship, Inc. and Fittipaldi Logistics, Inc. (25)
4.18		Form of Term Sheet for Purchase of Outstanding Debentures (Version 2) (28)
4.19		Form of Term Sheet for Purchase of Outstanding Debentures (Version 1) (28)
4.20		Form of Non-Plan Stock Option Agreement for Employees (29)
4.21		Form of Non-Plan Stock Options Agreement for Executives (29)
4.22		Articles of Merger between Fittipaldi Logistics, Inc. and Visium Technologies, Inc. (31)
4.23		$10,000 principal amount 12% convertible promissory note (35)
4.24		$5,000 principal amount 12% convertible promissory note (35)
4.25		$25,000 principal amount 12% convertible promissory note (35)
4.26		$25,000 principal amount 12% convertible promissory note (35)
4.27		$20,000 principal amount 12% convertible promissory note (35)
4.28		$20,000 principal amount 12% convertible promissory note (35)
4.29		$5,000 principal amount 12% convertible promissory note (35)
4.30		$20,000 principal amount 12% convertible promissory note (35)
4.31		$25,000 principal amount 12% convertible promissory note (35)
4.32		$25,000 principal amount 18% convertible promissory note (35)
4.33		$12,000 principal amount 12% convertible promissory note (35)
4.34		$10,000 principal amount 12% convertible promissory note (35)
4.35		$20,000 principal amount 12% convertible promissory note (35)
4.36		$18,000 principal 12.5% promissory note for services (35)
4.37		$30,000 principal amount 12% convertible promissory note (35)

 

 

 

  

4.38		$15,000 principal amount 12% convertible promissory note (35)
4.39		$10,000 principal amount 12% convertible promissory note (35)
4.40		$25,000 principal amount 18% convertible promissory note (35)
4.41		$25,000 principal amount 18% convertible promissory note (35)
4.42		$15,000 principal amount 12% convertible promissory note (35)
4.43		$25,000 principal amount 12% convertible promissory note (35)
4.44		$10,000 principal amount 12% convertible promissory note (35)
4.45		$25,000 principal amount 12% convertible promissory note (35)
4.46		$10,000 principal amount 12% convertible promissory note (35)
4.47		Form of Promissory Note issued to FirstFire Global Opportunities Fund, LLC (37)
4.48		Form of Warrant issued to FirstFire Global Opportunities Fund, LLC (37)
4.49		Form of Promissory Note issued to Auctus Fund, LLC (38)
4.50		Form of Warrant issued to Auctus Fund, LLC (38)
10.1		Securities Purchase Agreement (6)
10.2		Investor Registration Rights Agreement (6)
10.3		2001 Employee Stock Compensation Plan (3)
10.4		Employment Agreement with Richard Hersh (8)
10.5		Form of Intellectual Property Assignment Agreement between Power2Ship, Inc. and each of Richard Hersh, Michael J. Darden and John Urbanowicz (10)
10.6		Security Agreements for 14.25% secured convertible debentures (10)
10.7		Registration Rights Agreement for 14.25% secured convertible debentures (10)
10.8		Asset Purchase Agreement with GFC, Inc. (14)
10.9		Mutual Agreement with Commodity Express Transportation, Inc. (15)
10.10		Asset Purchase Agreement with GFC, Inc. (16)
10.11		Form of Unsecured Promissory Note (13)
10.12		Separation and Severance Agreement with Richard Hersh (23)
10.13		Consulting Agreement with Richard Hersh (23)
10.14		Consulting Agreement with David S. Brooks and S. Kevin Yates (as amended) (23)
10.15		Software Transaction Agreement Between Visium Technologies, Inc., Rentar Environmental Solutions, Inc. and the organizers of a new company to be formed (33)
10.16		Capital Contribution Agreement Between Rentar Logic, Inc., Rentar Environmental Solutions, Inc. and Visium Technologies, Inc. (33)
10.17		Rentar Logic, Inc. Shareholders Agreement (33)
10.18		Voting Trust Agreement Between Rentar Logic, Inc., Rentar Environmental Solutions, Inc. and Visium Technologies, Inc. (33)
10.19		Visium/Rentar Agreement April 2010 (35)
10.20		Employment Agreement with Kevin Yates (35)
10.21		Consulting Agreement with Will Williams (35)
10.22		Consulting Agreement with Mobile Software Team, LLC (35)
10.23		Consulting Agreement with C3i Sports, LLC (35)
10.24		Exclusive License Agreement between George Mason Research Foundation, Inc. and Visium Technologies, Inc.(36)
10.25		Securities Purchase Agreement by and between the Company and FirstFire Global Opportunities Fund, LLC (37)
10.26		Securities Purchase Agreement by and between the Company and Auctus Fund, LLC (38)
10.27		Amendment No. 1 to License Agreement,  dated May 7, 2020, between The MITRE Corporation and Visium Analytics, LLC (39)
14.1		Code of Ethics (11)
21.1		Subsidiaries of Registrant (20)*
31.1		Section 302 Certificate of Chief Executive Officer.*
31.2		Section 302 Certificate of Principal Financial Officer.*
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2		Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS		XBRL Instance Document *
101.SCH		XBRL Taxonomy Extension Schema *
101.CAL		XBRL Taxonomy Extension Calculation Linkbase *
101.DEF		XBRL Taxonomy Extension Definition Linkbase *
101.LAB		XBRL Taxonomy Extension Label Linkbase *
101.PRE		XBRL Taxonomy Extension Presentation Linkbase *

 

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

  

*	Filed herewith.
**	Furnished herewith.
(1)	Incorporated by reference to Current Report on Form 8-K filed on March 26, 2003.
(2)	Incorporated by reference to registration statement on Form 10-SB, as amended.
(3)	Incorporated by reference to definitive Schedule 14C Information Statement filed on February 2, 2001.
(4)	Incorporated by reference to definitive Schedule 14C Information Statement filed on April 22, 2003.
(5)	Incorporated by reference to Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
(6)	Incorporated by reference to Current Report on Form 8-K filed on July 8, 2004.
(7)	Incorporated by reference to Current Report on Form 8-K filed on January 3, 2002.
(8)	Incorporated by reference to Quarterly Report on Form 10-QSB for the period ended March 31, 2003.
(9)	Incorporated by reference to Preliminary Information Statement on Schedule 14C filed on July 8, 2004.
(10)	Incorporated by reference to registration statement on Form SB-2, SEC File No. 333-118792, filed on September 3, 2004.
(11)	Incorporated by reference to Amendment No. 1 to registration statement the Form SB-2, SEC File No. 333-118792, filed on October 20, 2004.
(12)	Incorporated by reference to Amendment No. 3 to the registration statement on Form SB-2, SEC File No. 333-118792, filed on December 15, 2004.
(13)	Incorporated by reference to Quarterly Report on Form 10-QSB for the period ended December 31, 2004 filed on February 14, 2005.
(14)	Incorporated by reference to Current Report on Form 8-K/A filed on February 25, 2005.
(15)	Incorporated by reference to Current Report on Form 8-K filed on March 25, 2005.
(16)	Incorporated by reference to Current Report on Form 8-K filed on March 28, 2005.
(17)	Incorporated by reference to Quarterly Report on Form 10-QSB for the period ended March 31, 2005.
(18)	Incorporated by reference to Current Report on Form 8-K filed on June 3, 2005.
(19)	Incorporated by reference to Current Report on Form 8-K filed on July 28, 2005.
(20)	Reserved
(21)	Incorporated by reference to Current Report on Form 8-K filed on February 17, 2006.
(22)	Incorporated by reference to Amendment No. 1 to registration statement the Form SB-2, SEC File No. 333-131832 filed on May 5, 2006.
(23)	Incorporated by reference to Annual Report on Form 10-K for the fiscal year ended June 30, 2006 filed on October 13, 2006.
(24)	Incorporated by reference to Current Report on Form 8-K filed on October 17, 2006.
(25)	Incorporated by reference to Current Report on Form 8-K filed on October 24, 2006.
(26)	Incorporated by reference to Current Report on Form 8-K filed on January 26, 2007.
(27)	Incorporated by reference to Current Report on Form 8-K filed on April 30, 2007.
(28)	Incorporated by reference to Current Report on Form 8-K filed on July 25, 2007.
(29)	Incorporated by reference to Annual Report on Form 10-KSB filed on October 15, 2007.
(30)	Incorporated by reference to Current Report on Form 8-K filed on November 15, 2007.
(31)	Incorporated by reference to Current Report on Form 8-K filed on December 31, 2007.
(32)	Incorporated by reference to Current Report on Form 8-K filed on March 25, 2008.
(33)	Incorporated by reference to Current Report on Form 8-K filed on June 13, 2008.
(34)	Incorporated by reference to Current Report on Form 8-K filed on October 16, 2008.
(35)	Incorporated by reference to Registration Statement on Form 10-12G/A filed on June 14, 2013.
(36)	Incorporated by reference to Current Report on Form 8-K filed on July 27, 2019.
(37)	Incorporated by reference to Current Report on Form 8-K filed on January 10, 2019.
(38)	Incorporated by reference to Current Report on Form 8-K filed on January 16, 2019.
(39)	Incorporated by reference to Exhibit 10.18 to Current Report on Form 8-K filed on May 13, 2020

SIGNATURES

 

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

 

VISIUM TECHNOLOGIES, INC.

 

 

By:	/s/ Mark Lucky
	Mark Lucky
	Chief Executive Officer

 

Date: October 13, 2021

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

SIGNATURE			TITLE		DATE
By:	/s/ Mark Lucky		Chief Executive Officer and Chief Financial Officer		October 13, 2021
			(principal accounting officer)

 

 

 

 

 

 

  

TABLE OF CONTENTS

 

 

Report of Independent Registered Public Accounting Firm	F-2
Financial Statements:
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Changes in Stockholders’ Deficit	F-5
Consolidated Statements of Cash Flows	F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-7 - F-17

 

 

	F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

  To the Board of Directors and

  Stockholders of Visium Technologies, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Visium Technologies, Inc. (the Company) as of June 30, 2021 and 2020, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended June 30, 2021, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph – Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses for the year ended June 30, 2021. The Company had a net loss of $3,373,459, had net cash used in operating activities of $792,640, and had negative working capital of $2,837,187. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

 Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

 

 Critical Audit Matters

 

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 

 

Extinguishment of Debt

 

 

Description of the Matter

 

 

In June 2021, the Company obtained a legal opinion to extinguish aged debt totaling $787,272 as detailed in Note 5. Each of the individual debt instruments were determined to be beyond the statute of limitations and it was determined that the Company has a complete defense to liability related to this debt under the applicable statute of limitations. Auditing the accuracy of the legal letter and applicable statue of limitations was based on significant auditor judgement.

 

 

How We Addressed the Matter in Our Audit

 

 

The primary procedures we performed to address this critical audit matter include the following: (i) obtaining the legal opinion supporting the write-off of the liabilities; (ii) evaluating the expertise and qualifications of the firm providing the legal opinion and concluding that they have the necessary expertise to provide such an opinion; (iii) substantiating the opinion by attempting to confirming the specific debts written off either in current or through past confirmation attempts (iv) reviewing the convertible note agreements and verifying the dates of those debts that have been written off and are in fact past the statute of limitations. Based on these procedures and evidence obtained we concluded that the debts were appropriately written off.

 

 

 

We have served as the Company’s auditor since 2017.
Margate, Florida October 13, 2021

 

	F-2

VISIUM TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

 

 

		June 30,
		2021				2020
ASSETS
Current assets:
Cash		$	125,166			$	30,251
Prepaid license fee			55,418				-
Total current assets			180,584				30,251
Total assets		$	180,584			$	30,251
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses		$	425,804			$	333,805
Accrued compensation			672,529				652,529
Accrued interest			366,149				677,857
Convertible notes payable to ASC Recap LLC			147,965				147,965
Convertible notes payable, net of discount of $396,033 and $0, respectively			809,195				852,965
Derivative liability			184,381				438,553
Notes payable, net of discount of $18,252 and $0, respectively			411,748				205,000
Due to officers			-				102,340
Total current liabilities			3,017,771				3,411,011
Commitments and contingencies (Note 11)
Stockholders’ deficit:
Preferred stock
Series A Convertible Stock ($0.001 par value; 20,000,000 shares authorized, 13,992,340 shares issued and outstanding as of June 30, 2021 and 2020, respectively)			13,992				13,992
Series B Convertible Stock ($0.001 par value 30,000,000 shares authorized, 1,327,640 shares issued and outstanding as of June 30, 2021 and 2020, respectively)			1,328				1,328
Series AA Convertible Stock ($0.001 par value; 1 share authorized, 1 share issued and outstanding as of June 30, 2021 and 2020)			0				0
Common stock, $0.0001 par value, 10,000,000,000 shares authorized: 3,098,271,081 shares issued and 2,946,271,108 outstanding at June 30, 2021, and 1,544,793,446 shares issued and 1,544,126,787 outstanding at June 30, 2020, respectively (See Note 6)			294,627				154,413
Additional paid in capital			48,217,903				44,441,085
Accumulated deficit			(51,365,037	)			(47,991,578	)
Total stockholders’ deficit			(2,837,187	)			(3,380,760	)
Total liabilities and stockholders’ deficit		$	180,584			$	30,251

 

See accompanying notes to consolidated financial statements.

 

 

	F-3

 

 

 

 

VISIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

		FOR THE YEAR ENDED
		June 30, 2021				June 30, 2020
Revenues		$	25,000			$	-
Operating expenses:
Selling, general and administrative			3,879,158				917,993
Development expense			258,168				35,500
Total operating expenses			4,137,326				953,493
Loss from operations			(4,112,326	)			(953,493	)
Other income (expense)
Gain on change in fair value of derivative liabilities			1,844,460				385,367
Derivative liability expense			(1,059,282	)			(61,396	)
Interest expense			(442,171	)			(323,021	)
Gain (loss) on debt settlement			28,863				(593,907	)
Gain on debt write off			578,408				-
Warrant exercise expense			(211,411	)			-
Other income			-				4,000
Total other income (expense)			738,867				(588,957	)
Net loss		$	(3,373,459	)		$	(1,542,450	)
Weighted average common shares
Basic and diluted			1,977,488,957				312,626,670
Net loss Per Common Share –Basic and Diluted:		$	(0.002	)		$	(0.005	)

 

See accompanying notes to consolidated financial statements.

 

 

	F-4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED JUNE 30, 2021 AND 2020

 

 

		Preferred								Preferred								Preferred
		Stock -								Stock -								Stock -								Common
		Series A								Series B								Series AA								Stock
		$0.001								$0.001								$0.001								$0.0001								Additional								Total
		Par Value								Par Value								Par Value								Par Value								Paid-in				Accumulated				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 as compensation to directors and officers																											348,000,000				34,800				113,200								148,000
Shares issued for consulting services																											199,850,000				19,985				178,750								198,735
Shares issued for conversion of notes payable																											954,210,518				95,421				964,151								1,059,572
Net loss for the year ended June 30, 2021																																							(1,542,450	)			(1,542,450	)
Balance at June 30, 2020			13,992,340			$	13,992				1,327,670			$	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																											220,000,000				22,000				2,787,000								2,809,000
Shares issued for consulting services																											56,666,669				5,667				348,333								354,000
Shares issued for conversion of notes payable																											524,543,160				52,454				338,585								391,039
Commitment shares issued pursuant to financings																											225,000,000				22,500				110,529								133,029
Shares issued upon exercise of stock warrants																											375,934,483				37,593				173,818								211,411
Amortization of deferred compensation																																			18,553								18,553
Net loss for the year ended June 30, 2021																																							(3,373,459	)			(3,373,459	)
Balance at June 30, 2021			13,992,340			$	13,992				1,327,670			$	1,328				1			$	0				2,946,271,099			$	294,627			$	48,217,903			$	(51,365,037	)		$	(2,837,187	)

 

See accompanying notes to consolidated financial statements.

 

 

	F-5

 

 

 

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

	FOR THE YEAR ENDED
		June 30, 2021				June 30, 2020
Cash flows from operating activities:
Net loss	$	(3,373,459	)		$	(1,542,450	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discounts		305,499				206,249
Stock based payments for consultants, directors, and officers		3,163,000				346,735
(Gain) loss on debt settlement/write-offs		(607,271	)			593,907
Gain on change in fair value of derivative liabilities		(1,844,460	)			(385,367	)
Warrant conversion expense		211,411				-
Derivative liability expense		1,059,282				61,396
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		445,850				130,832
Accrued compensation		20,000				336,000
Accrued interest		96,007				145,941
Prepaid license fee		(55,417	)			-
Discount on notes payable		(213,082	)			-
Net cash used in operating activities		(792,640	)			(106,757	)
Cash flows from financing activities:
Advance from officers		(102,340	)			40,340
Proceeds from convertible notes payable		838,595				78,000
Proceeds from short term notes payable		225,000				-
Repayment of convertible notes		(73,700	)			-
Net cash provided by financing activities		887,555				118,340
Net increase in cash		94,915				11,583
Cash at beginning of year		30,251				18,668
Cash at end of year	$	125,166			$	30,251
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	39,755			$	-
Income taxes	$	-			$	-
Issuance of common stock for conversion of notes payable and accrued interest (fair value of the shares issued - $2,227,062 and $1,059,572, respectively	$	188,460			$	333,220
Change in fair value of derivative liability related to debt conversions	$	-			$	92,444
Derivative liability attributable to debt discount on new notes payable		-				48,000

 

 

See accompanying notes to consolidated financial statements.

 

	F-6

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 1: ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN

 

Visium Technologies, Inc., or the Company, is a Florida corporation that was originally incorporated in Nevada in October 1987. It was formerly known as Jaguar Investments, Inc. between October 1987 and May 2003, Power2Ship, Inc. between May 2003 and November 2006, Fittipaldi Logistics, Inc. between November 2006 and December 2007, and as NuState Energy Holdings, Inc. between December 2007 and March 5, 2018 when it changed its name to Visium Technologies, Inc.

 

The Company is focused on digital risk management, cybersecurity, and technology services for network physical security, the Cloud, mobility solutions, and the Internet of Things (“IOT”).

 

In April 2021 the Company created JAJ Advisory, LLC, a Viriginia limited liability company. The LLC was established to account for non-cybersecurity related business activities that the Company may pursue.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis. For the year ended June 30, 2021 we had a net loss of $3,373,459, had net cash used in operating activities of $792,640 and had negative working capital of $2,837,187. 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.

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

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 and derivative liabilities valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate and in the valuation allowance of deferred tax assets.

 

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 years ended June 30, 2021 and 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.

 

Derivative Liabilities

 

The Company assessed the classification of its derivative financial instruments as of June 30, 2021 and 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.

 

	F-8

 

 

 

 

 

 

 

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

The Company uses judgment in determining the fair value of derivative liabilities at the date of issuance and at every balance sheet thereafter and in determining which valuation method is most appropriate for the instrument, the expected volatility, the implied risk-free interest rate, as well as the expected dividend rate, if any. The Company recorded a derivative liability as of June 30, 2021 of $184,381.

 

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.

 

Convertible Instruments

 

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 determines whether the instruments issued in the transactions are considered indexed to the Company’s own stock. During fiscal years 2014 through 2020 the Company’s issued convertible securities with variable conversion provisions that resulted in derivative liabilities. See discussion above under derivative liabilities that resulted in a change in derivative liability accounting.

 

	F-9

 

 

 

  

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Revenue Recognition

 

All revenues are recorded in accordance with ASC 606, which is recognized when: (i) a contract with a client has been identified, (ii) the performance obligation(s) in the contract have been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to each performance obligation in the contract, and (v) the Company has satisfied the applicable performance obligation over time.

 

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 June 30, 2021, 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 is 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.

 

 

	F-10

 

 

 

 

 

 

 

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Recent Accounting Pronouncements

 

All new accounting pronouncements issued but not yet effective are not expected to have a material impact on our results of operations, cash flows or financial position. There have been no new accounting pronouncements not yet effective that have significance to our consolidated 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 includable in the computation of fully diluted per-share results are not presented in the financial statements for the year ended June 30, 2021 and 2020 as their effect would be anti-dilutive. Potential common shares that would be as follows:

 

		For the Years ended June 30,
		2021				2020
Weighted average common shares outstanding			1,977,488,957				312,626,670
Effect of dilutive securities-when applicable:
Convertible promissory notes			142,079,692				1,014,701,330
Preferred Stock			13,996,767				13,996,767
Warrants			12,165,260				500,000
Fully diluted earnings per share—adjusted weighted-average shares and assumed conversions			2,145,730,676				1,341,824,767

 

 

	F-11

 

 

 

 

 

 

 

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 3: PREPAID LICENSE FEE

 

In April 2021, the Company entered into two-year software license agreement to enable product development. The license fee is prepaid annually at a rate of $70,000 annually. The prepaid license fee is amortized on a straight line basis over the term of the license agreement, and is included in Development expense in our Statement of Operations.

 

NOTE 4: DERIVATIVE LIABILITY

 

Derivative liability - warrants

 

The Company issued warrants in connection with convertible notes payable which were issued in January, February, and June 2021. 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 stated conversion for each warrant, ranging from $0.0055 to $0.02 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 June 30, 2021 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 June 30, 2021 and June 30, 2020 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 $1,844,460 and $385,367 for the years ended June 30, 2021 and 2020, respectively in the Company’s consolidated statements of operations, under the caption “Gain in change of fair value of derivative liability”. The fair value of the warrants at June 30, 2021 and June 30, 2020 was $69,334 and $250, respectively. The fair value of the derivative liability related to the convertible debt at June 30, 2021 and June 30, 2020 is $115,047 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:

 

 

		Year Ended June 30,
		2021				2020
Effective exercise price		$	0.00361 – $0.02			$	0.00032 – $0.00091
Effective market price		$	0.006			$	0.0008
Expected volatility			96.4% to 304.0	%			323.22% to 335.47	%
Risk-free interest			0.05% - 0.25	%			0.05	%
Expected terms			60 - 711 days				60 - 559 days
Expected dividend rate			0	%			0	%

 

 

	F-12

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 5: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE

 

Convertible Notes Payable

 

At June 30, 2021 and June 30, 2020 convertible debentures consisted of the following:

 

 

		June 30,
		2021				2020
Convertible notes payable		$	1,205,228			$	852,962
Discount on convertible notes			(396,033	)			-
Convertible notes, net			809,195				852,962
Convertible notes payable to ASC Recap			147,965				147,965
Total		$	957,160			$	1,000,927

 

The Company had convertible promissory notes aggregating approximately $957,000 and $1.1 million at June 30, 2021 and June 30, 2020, respectively. The related accrued interest amounted to approximately $162,765 and $503,068 at June 30, 2021 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 $0.00361 to $22,500 (as a result of two reverse stock splits) per share. At June 30, 2021, $324,009 of convertible promissory notes had matured, are in default and remain unpaid. There is no provision in the note agreements for adjustments to the interest rates on these notes in the event of default.

 

In June 2021, the Company obtained a legal opinion to extinguish aged debt totaling $787,272 as detailed in the following table. Each of the individual debt instruments were determined to be beyond the statute of limitations and it was determined that the Company has a complete defense to liability related to this debt under the applicable statute of limitations.

 

Accrued interest expense		$	385,803
Convertible notes payable			401,469
		$	787,272

 

 

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 12). 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.

 

For the year ended June 30, 2021, the following summarizes the conversion of debt for common shares:

 

		Amount			Adjustment		Conversion
	Shares	Converted		Conversion	to		Price
Name	Issued	Principal	Interest	Expense	Fair Value	Total	Per Share
FirstFire Global Opportunities Fund LLC	49,000,000	$ 14,725	$ -	$ 1,200	$ 18,375	$ 34,300	$ 0.0003
Auctus Funds, LLC	414,144,160	74,928	3,603	4,500	177,005	260,036	0.0002
Labrys	61,399,000	77,203	18,000	1,500	-	97,603	0.0016
TOTAL	524,543,160	$ 166,856	$ 21,603	$ 7,200	$ 195,380	$ 391,039	$ 0.00037

 

Transactions

 

Convertible Notes Payable

 

On February 8, 2021, the Company issued a promissory note to Labrys Fund, LP in the principal amount of $500,000 for a purchase price of $475,000. Pursuant to the Purchase Agreement, the Company issued to the Investor a warrant to purchase 12,500,000 shares of the Company’s common stock as a condition to closing. The closing of the Purchase Agreement occurred on February 10, 2021, with the Purchase Price funded to the Company on such date.

 

The Note, which reflects a $25,000 original issuance discount, bears interest at 8% per year and matures on February 8, 2022. The Note includes an interim payment of $65,000, payable to the Investor on August 8, 2021. The Company has the right to prepay the Note in full, including accrued but unpaid interest, without prepayment penalty provided an event of default, as defined therein, has not occurred. The Note is convertible into shares of the Company’s common stock at conversion price of $0.02 per share, subject to adjustment as provided therein.

 

The Warrant is exercisable for a term of two-years from the date of issuance, at an exercise price equal to $0.02 per share, subject to adjustment as provided therein. The Warrants provide for cashless exercise to the extent that the market price (as defined therein) of one share of the Company’s common stock is greater than the exercise price of the Warrant.

 

On January 12, 2021, the Company issued a promissory note to Labrys Fund, LP in the principal amount of $200,000 for a purchase price of $190,000. Pursuant to the Purchase Agreement, the Company issued to the Investor a warrant to purchase 22,172,949 shares of the Company’s common stock as a condition to closing. The closing of the Purchase Agreement occurred on January 14, 2021, with the Purchase Price funded to the Company on such date.

 

The Note, which reflects a $10,000 original issuance discount, bears interest at 8% per year and matures on January 12, 2022. The Note includes an interim payment of $26,000, payable to the Investor on July 12, 2021. The Company has the right to prepay the Note in full, including accrued but unpaid interest, without prepayment penalty provided an event of default, as defined therein, has not occurred. The Note is convertible into shares of the Company’s common stock at conversion price of $0.005 per share, subject to adjustment as provided therein.

 

The Warrant is exercisable for a term of two-years from the date of issuance, at an exercise price equal to 110% of the closing price of the Company’s common stock on the date of issuance, subject to adjustment as provided therein. The Warrants provide for cashless exercise to the extent that the market price (as defined therein) of one share of the Company’s common stock is greater than the exercise price of the Warrant.

 

On November 23, 2020, the Company issued a promissory note to Labrys Fund, LP in the principal amount of $150,000 for a purchase price of $135,000. Pursuant to the Purchase Agreement, the Company issued Labrys 90,000,000 shares of the Company’s common stock as a condition to closing.

 

The Note, which reflects a 10% original issuance discount, bears interest at 12% per year and matures on November 23, 2021. The Note includes an interim payment of $16,800, payable to the Investor payable within 90 calendar days from the issuance of the Note. The Company has the right to prepay the Note in full, including accrued but unpaid interest, without prepayment penalty provided an event of default, as defined therein, has not occurred. The Note is convertible into shares of the Company’s common stock at conversion price of $0.001575 per share, subject to adjustment as provided therein.

 

On June 17, 2021, the Company issued a promissory note to Labrys Fund, LP in the principal amount of $109,250 for a purchase price of $115,000.

 

The Note, which reflects a 5% original issuance discount, bears interest at 8% per year and matures on June 17, 2022. he Company has the right to prepay the Note in full, including accrued but unpaid interest, without prepayment penalty provided an event of default, as defined therein, has not occurred. The Note is convertible into shares of the Company’s common stock at conversion price of $0.006 per share, subject to adjustment as provided therein. The closing of the Purchase Agreement occurred on June 21, 2021.

 

Notes Payable

 

The Company had promissory notes aggregating $411,748 and $205,000 at June 30, 2021 and 2020, respectively. The related accrued interest amounted to approximately $203,384 and $175,000 at June 30, 2021 and June 30, 2020, respectively. The notes payable bear interest at rates ranging from 0% to 16% per annum and are payable monthly. Promissory notes totaling $205,000 that are outstanding as of June 30, 2021 have matured, are in default, and remain unpaid. There is no provision in the note agreements for adjustments to the interest rates on these notes in the event of default.

 

In October, 2020 the Company issued $ promissory notes totaling $225,000 to three accredited investors. The notes have a term of one year, and bear interest at 8%.

 

The Company recognized interest expense on promissory notes payable of approximately $28,400 and $16,000 during the fiscal years 2021 and 2020, respectively.

 

	F-13

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 6: ACCRUED INTEREST PAYABLE

 

Changes in accrued interest payable during the year ended June 30, 2021, is as follows:

 

 

Accrued interest payable at June 30, 2020		$	677,857
Interest expense on notes payable for the year ended June, 2021			136,360
Write off of accrued interest			(385,803	)
Payments of accrued interest			(40,662	)
Conversion of accrued interest into common stock			(21,603	)
Accrued interest payable at June 30, 2021		$	366,149

 

Interest expense for year ended June 30, 2021 was comprised of the following:

 

 

Interest expense for the year ended June 30, 2021		$	136,668
Amortization of debt discount			305,499
Total interest expense for the year ended June 30, 2021		$	442,167

 

 

NOTE 7: STOCKHOLDERS’ DEFICIT

 

Common Stock

 

At June 30, 2021, the Company had 10,000,000,000 authorized common shares. At June 30, 2021, the Company has 3,098,271,081 common shares issued of which 2,946,271,108 were outstanding, which is net of 152,666,659 unvested shares issued for the restricted stock awards granted during the year. See Note 7.

 

Issuances of Common Stock During 2021

 

Convertible Notes Payable

 

During the fiscal year ended June 30, 2021 the Company issued 524,543,160 shares of its common stock related to the conversion of $188,460 of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.00037 per share. The fair value of these conversions was $2,031,402.

 

Stock Based Compensation

 

During the fiscal year ended June 30, 2021 the Company issued 220,000,000 shares of its $0.0001 par value common stock as compensation to its directors and officers related to the vesting of restricted stock grants. The shares were valued at $2,809,000, or $0.0128 per share, based on the share price at the time of the transactions.

 

During the fiscal year ended June 30, 2021 we issued 56,666,670 shares of its common stock to consultants, as compensation. The shares were valued at $0.00625, the market price on the date of issuance for a total value of $354,000. The expense is included in general and administrative expenses and was recognized on the date the stock was issued or vested.

 

 

Issuances of Common Stock During the Year ended June 30, 2020

 

Convertible Notes Payable

 

During the fiscal year ended June 30, 2020 the Company issued 954,210,518 shares of its common stock related to the conversion of $333,220 of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.00041 per share. The fair value of these conversions was $1,059,572, resulting in a net loss of $593,907.

 

Stock Based Compensation

 

During the fiscal year ended June 30, 2020 the Company issued 348,000,000 shares of its $0.0001 par value common stock as compensation to its directors and officers related to the vesting of restricted stock grants. The shares were valued at $148,000, or $0.00043 per share, based on the share price at the time of the transactions.

 

During the fiscal year ended June 30, 2020 we issued 199,850,000 shares of its common stock to consultants, as compensation. The shares were valued at $0.001, the market price on the date of issuance for a total value of $198,735. The expense is included in general and administrative expenses and was recognized on the date the stock was issued or vested.

 

Common Stock Warrants

 

In January and February 2021, we issued 39,370,677 warrants with a two year life, and fixed exercise prices ranging from $0.0055 to $0.02 per share. An additional 9,239,130 warrant shares were issued due to repricing certain warrants with a $0.02 exercise price to a $0.0115 exercise price.

 

In January 2019 we issued 500,000 warrants with a three year life and a conversion price of $0.15 per share. These warrants had 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.

 

The holders of the warrants issued in 2019 exercised all of their warrants on a cashless basis, during the three months ended December 31, 2020. Due to the price protection features of these warrants, the Company issued 374,500,000 warrant shares to these warrant holders.

 

A summary of the status of the Company’s outstanding common stock warrants as of June 30, 2021 and changes during the fiscal year 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	46,838,209	$0.011
Granted due to repricing	347,761,534	0.0002
Exercised	(375,934,483)	0.0002
Forfeited	(7,000,000)	0.0002
Balance at end of period	12,165,260	$0.011
Warrants exercisable at end of period	12,165,260	$0.011
Weighted average fair value of warrants granted due to repricing during the period		$72,992

 

Preferred Stock

 

Series A, B, and AA 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 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 2019, the Company authorized and issued one (1) 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 Chief Executive Officer, is the holder of the one (1) share of Series AA Convertible Preferred Stock.

 

 

	F-14

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 8 - STOCK-BASED COMPENSATION

 

The Company adopted an Incentive Stock Plan on April 18, 2021. This plan is intended to provide incentives which will attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company’s common stock or to receive monetary payments based on the value of such shares pursuant to Awards issued. While the plan terminates 10 years after the adoption date, issued options have their own schedule of termination. Options to acquire shares of common stock may be granted at no less than fair market value on the date of grant. Upon exercise, shares of new common stock are issued by the Company.

 

Under the 2021 Stock Incentive Plan, the Company has issued options to purchase 16 million shares at an average price of $0.015 with a fair value of $0.00. For the years ended June 30, 2021 and 2020, the Company issued options to purchase 16 million and 0 shares, respectively. Upon exercise, shares of new common stock are issued by the Company.

 

For the years ended June 30, 2021 and 2020, the Company recognized an expense of approximately $18,554 and $0, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying Consolidated Statement of Operations) determined by application of a binomial option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility. As of June 30, 2021, the Company had approximately $143,141 of unrecognized pre-tax non-cash compensation expense, which the Company expects to recognize, based on a weighted-average period of 0.83 years. The Company used straight-line amortization of compensation expense over the one-year requisite service or vesting period of the grant. The Company recognizes forfeitures as they occur. There are options to purchase approximately 1,583,000 shares that have vested as of June 30, 2021.

 

The Company uses a binomial option pricing model to estimate the fair value of its stock option awards and warrant issuances. The calculation of the fair value of the awards using the binomial option-pricing model is affected by the Company’s stock price on the date of grant as well as assumptions regarding the following:

 

		Year ended June 30,
		2021				2020
Expected volatility			369.76% - 496.27	%			-	%
Expected term			4 Years				-
Risk-free interest rate			0.76%-0.84	%			-	%
Forfeiture Rate			0.00	%			-	%
Expected dividend yield			0.00	%			-	%

 

The expected volatility was determined with reference to the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant.

 

A summary of the status of the Company’s outstanding stock options as of June 30, 2021 and 2020 and changes during the periods ending on that date is as follows:

 

						Weighted Average								Aggregate				Weighted
						Exercise				Grant Date Fair				Intrinsic				Average Remaining
		Shares				Price				Value				Value				Term (Yrs)
Options
At June 30, 2020			-			$	-			$	-			$	0
Granted			16,000,000				0.015				-				0				4.96
Exercised			-				.-				-				-
Forfeiture and cancelled			-				-
At June 30, 2021			16,000,000			$	0.015			$	-			$	0				4.96

 

The following table summarizes information about employee stock options outstanding at June 30, 2021:

 

		Outstanding Options												Vested Options
		Number												Number
		Outstanding				Weighted				Weighted				Exercisable				Weighted				Weighted
		at				Averaged				Averaged				at				Averaged				Averaged
		June 30,				Remaining				Exercise				June 30,				Exercise				Remaining
Range of Exercise Price		2020				Life				Price				2020				Price				Life
$0.01			8,000,000				5.00			$	0.01				1,333,333			$	0.01				5.00
$0.02			8,000,000				4.92			$	0.02				250,000			$	0.02				4.92
Outstanding options			16,000,000				4.96			$	0.015				1,583,333			$	0.015				4.96

 

As of June 30, 2021, the Company had approximately $143,141 of unrecognized pre-tax non-cash compensation expense, which the Company expects to recognize, based on a weighted-average period of 0.96 years.

 

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 year ended June 30, 2021 and 2020 is presented in the following table:

 

 

		For the Year ended
		June 30, 2021								June 30, 2020
						Weighted								Weighted
						Average								Average
						Grant Date								Grant Date
		Shares				Fair Value				Shares				Fair Value
Unvested at beginning of period			666,659			$	0.06				3,544,447			$	0.06
Granted			198,000,000			$	0.0115				-			$	-
Forfeited			-				-				(1,227,788	)			0.06
Vested			(66,666,659	)		$	0.0115				(1,650,000	)		$	0.06
Unvested at end of period			132,000,000			$	0.0115				666,659			$	0.06

 

Unrecognized compensation expense related to outstanding restricted stock awards to consultants as of June 30, 2021 was $1,518,000 and is expected to be recognized over a weighted average period of 0.75 years.

 

NOTE 9: INCOME TAXES

 

The Company has not filed its corporate tax returns since fiscal 2007.

 

Due to recurring losses, the Company’s tax provision for the years ended June 30 2021 and 2020 was $0.

 

The difference between the effective income tax rate and the applicable statutory federal income tax rate is summarized as follows:

 

		2021				2020
Statutory federal rate			(21.7	)%			(21.0	)%
State income tax rate, net of federal benefit			(3.6	)%			(3.6	)%
Permanent differences, including stock-based compensation			8.6	%			8.6	%
Change in valuation allowance			16.7	%			16.0	%
Effective tax rate			0.0	%			0.0	%

 

At June 30, 2021 and 2020 the Company’s deferred tax assets were as follows:

 

 

		June 30, 2021				June 30, 2020
Tax benefit of net operating loss carry forward		$	7,245,000			$	7,047,000
Intangible			-				-
Total deferred tax assets			7,245,000				7,047,000
Less: valuation allowance			(7,245,000	)			(7,047,000	)
Net deferred tax assets		$	-			$	-

 

As of June 30, 2020, the Company had unused net operating loss carry forwards of approximately $34.5 million available to reduce future federal taxable income. Net operating loss carryforwards expire through fiscal years ending 2039. Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally a greater than 50% change in ownership).

 

 

	F-15

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 9: INCOME TAXES, continued

 

The Company’s ability to offset future taxable income, if any, with tax net operating loss carryforwards may be limited due to the non-filing of tax returns and the impact of the statute of limitations on the Company’s ability to claim such benefits. Furthermore, changes in ownership may result in limitations under Internal Revenue Code Section 382. Due to these limitations, and other considerations, management has established full valuation allowances on deferred tax assets relating to net operating loss carryforward, as the realization of any future benefits from these assets is uncertain.

 

The Company’s valuation allowance at June 30, 2021 and 2020 was $7,245,000 and $7,047,000, respectively. The change in the valuation allowance during the year ended June 30, 2020 was an increase of approximately $198,000. The change in the valuation allowance during the year ended June 30, 2020 was a decrease of $943,000. Effective December 22, 2018 a new tax bill was signed into law that reduced the federal income tax rate for corporations from 35% to 21.7% for the year ended June 30, 2020. Going forward the blended rate will be 25.4% for future years.

 

NOTE 10: RELATED PARTY TRANSACTIONS

 

Equity transactions with related parties are described in Note 7.

 

From time to time we have borrowed operating funds from Mr. Mark Lucky, our Chief Executive Officer and from certain Directors, for working capital. The advances were payable upon demand and were interest free. During year ended June 30, 2021 Mr. Lucky advanced $40,340 to the Company. $0 in advances remain outstanding as of June 30, 2021. Mr. Lucky is owed $1,451 for out-of-pocket expenses as of June 30, 2021, which is included on the balance sheet in Accounts payable and accrued expenses.

 

NOTE 11: COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

The Company operates virtually, with no office space rented. The Company has no future minimum annual payments under non-cancelable operating leases at June 30, 2021.

 

 

 

	F-16

 

 

 

 

 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 AND 2020

 

NOTE 11: COMMITMENTS AND CONTINGENCIES, continued

 

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 June 30, 2021, 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 June 30, 2021, 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 6%, respectively. As of June 30, 2021, 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.

 

In January 2021 the Company won a dismissal of an involuntary bankruptcy petition that was filed against the Company in the Southern District Court of Florida on December 30, 2020, which had been brought by three parties, (i) Tarpon Bay Partners LLC, (ii) J.P. Carey Enterprises Inc., and (iii) Anvil Financial Mgmt LLC (collectively the "Petitioning Creditors").

 

The Court ruled in the Company's favor, dismissing the involuntary bankruptcy petition and allowing the Company to file a motion with the Court seeking compensatory and punitive damages. In addition, Visium plans to file an affidavit of fees and costs incurred in connection with Visium's defense of the Involuntary Petition.

 

In March 2021 the Company filed a Complaint for Damages and Other Relief against Tarpon Bay Partners, LLC, a Florida limited liability company; J.P. Carey Enterprises, Inc., a Florida profit corporation; Anvil Financial Management, LLC, a Florida limited liability company; Stephen Hicks, an individual; Joseph C Canouse, an individual; Jeffrey M. Canouse, an individual; Paul A. Rachmuth, an individual; and Litt Law Group, LLC, a New York Limited Liability Company (collectively the “Defendants”) related to the involuntary bankruptcy petition. The Company is seeking damages from the Defendants for reasonable attorneys’ fees and costs, as well as compensatory, consequential special and punitive damages.

 

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.

 

Note 12 – Fair Value Measurement

 

Fair value measurements

 

At June 30, 2021 and 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 June 30, 2021, the estimated fair values of the liabilities measured on a recurring basis are as follows:

 

 

		Fair Value Measurements at
		June 30, 2021:
		(Level 1)				(Level 2)				(Level 3)
Derivative liability – Convertible notes											115,047
Derivative liability – Warrants		$	-			$	-			$	69,334
Total derivative liability		$	-			$	-			$	184,381

 

NOTE 13: SUBSEQUENT EVENTS

 

In the quarter ended September 30 2021, our consultants vested 31,500,000 shares of our $0.0001 par value common stock, valued at $362,250, or at an average price per share of $0.0115.

 

In the quarter ended September 30 2021our directors and officers vested 30,000,000 shares of our $0.0001 par value common stock, valued at $345,000, or at an average price per share of $0.0115.

 

In July 2021 the Company issued 198,046,241 shares of its $0.0001 par value common stock upon the conversion of principal and interest of $807,930 of its outstanding convertible notes, valued at $0.0042 per share.

 

In July 2021 the Company issued 6,587,229 shares of its $0.0001 par value common stock upon the cashless exercise of a common stock warrant.

 

In September 2021 the Company entered into two securities purchase agreement (the “Purchase Agreements”) with a single institutional investor (the “Purchaser”) resulting in the raise of $1,500,000 in gross proceeds to the Company. Pursuant to the terms of the Purchase Agreements, the Company agreed to sell, in a registered director offering, an aggregate of 300,000,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) at a purchase price of $0.005 per Share (the “Offering”). The Offerings closed on September 15, 2021 and September 27, 2021, respectively.

 

In September 2021 the Company repaid the remaining outstanding convertible debt held by Labrys Funds, LP in the principal amount of $115,000, plus accrued interest.

 

	F-17

 

 

 

 

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