VISIUM TECHNOLOGIES, INC. [VISM] Filings

10-Q 1 vism_10q.htm FORM 10-Q vism_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

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

For the transition period from ___________ to ___________.

Commission file number 000-25753

VISIUM TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Florida		87-0449667
(State of Incorporation)		(IRS Employer Identification No.)

4094 MAJESTIC LANE, SUITE 360

FAIRFAX, VA 22033

(Address of principal executive offices)

(703) 273-0383

Registrant’s telephone number, including area code:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller Reporting Company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value per share, as of May 15, 2023, was 10,603,284.

When used in this quarterly report, the terms “Visium,” “the Company,” “we,” “our,” and “us” refer to Visium Technologies, Inc., a Florida corporation.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management's current beliefs, estimates and assumptions and on information currently available to management that we believe may affect our financial condition, results of operation, business strategy and financial need. Such statements involve substantial risk and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and objectives for future operations are forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions.

These risks and uncertainties include, among other things, risks related to our expectations regarding global macro-economic conditions, including the effects of inflation, rising and fluctuating interest rates and market volatility on the global economy; our ability to estimate the size and growth of our total addressable market, and the development of the market for our products, which is new and evolving; our ability to effectively sustain and manage our growth and future expenses, achieve and maintain future profitability, attract new customers; the impact of the coronavirus pandemic (the “COVID-19 pandemic”) or its abatement, on our business, results of operations, financial condition, and future profitability and growth; the impact of the evolving COVID-19 pandemic on the businesses of our customers, partners and suppliers, and the economy; the effects of increased competition in our market and our ability to compete effectively; our ability to expand use cases within existing customers and vertical solutions; our ability to expand our operations and increase adoption of our platform internationally; our ability to expand our direct sales force, customer success team and strategic partnerships around the world; the sufficiency of our cash and capital resources to satisfy our liquidity needs; our ability to hire, retain and motivate qualified personnel, including executive level management; and our ability to successfully manage and integrate executive management transitions; uncertainties regarding the impact of general economic and market conditions, including as a result of regional and global conflicts or related government sanctions;.

Most of these factors are difficult to predict and are generally beyond our control. Therefore, you should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law. Further information on potential factors that could affect our business is described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission, or the SEC, on October 4, 2022. Readers are also urged to carefully review and consider the various disclosures we have made in this Quarterly Report on form 10-Q and in our Annual Report on Form 10-K.

VISIUM TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX

PART I - FINANCIAL INFORMATION		4
Item 1. Financial Statements		4
Consolidated Balance Sheets – March 31, 2023 (unaudited) and June 30, 2022		4
Consolidated Statements of Operations - Three and Nine Months ended March 31, 2023 and 2022 (unaudited)		5
Consolidated Statements of Changes in Stockholders’ Deficit (unaudited) – Three and Nine Months ended March 31, 2023 and 2022		6
Consolidated Statements of Cash Flows - Nine Months Ended March 31, 2023 and 2022 (unaudited)		8
Notes to Consolidated Financial Statements (unaudited)		9
Item 2. Management’s Discussion and Analysis and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
Item 4. Controls and Procedures		29
PART II - OTHER INFORMATION		30
Item 1. Legal Proceedings.		30
Item 1A. Risk Factors.		30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		30
Item 3. Defaults Upon Senior Securities.		30
Item 4. Mine Safety Disclosures.		30
Item 5. Other Information.		30
Item 6. Exhibits		30
SIGNATURES		31

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

VISIUM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS

	March 31, 2023			June 30, 2022(1)
	(Unaudited)
ASSETS
Current assets:
Cash	$	46,750		$	136,990
Prepaid license fee		17,500			-

Total current assets		64,250			136,990

Total assets	$	64,250		$	136,990

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued expenses	$	661,164		$	596,463
Accrued compensation		1,190,629			614,589
Due to officer		72,500			-
Accrued interest		434,076			404,712
Convertible notes payable, net of discount of $0 and $412,944		1,431,790			1,074,487
Derivative liabilities		182,316			35,297
Notes payable, net of discount of $11,738 and $0		343,262			205,000
Total current liabilities		4,315,737			2,930,548

Commitments and contingencies (Note 10)

Stockholders’ deficit:

Series A Convertible Preferred Stock ($0.001 par value; 20,000,000 shares authorized, 13,992,340 shares issued and outstanding as of March 31, 2023 and June 30, 2022, respectively)		13,992			13,992
Series B Convertible Preferred Stock ($0.001 par value 30,000,000 shares authorized, 1,327,670 shares issued and outstanding as of March 31, 2023 and June 30, 2022, respectively)		1,328			1,328
Series AA Convertible Preferred Stock ($0.001 par value; 1 share authorized, 1 share issued and outstanding as of March 31, 2023 and June 30, 2022, respectively)		0			0
Common stock, $0.0001 par value, 1,000,000,000 shares authorized: 7,380,323 shares issued and 5,588,656 shares outstanding at March 31, 2023, and 2,903,804 shares issued and 2,896,385 shares outstanding at June 30, 2022, respectively (See Note 7)		559			288
Additional paid in capital		54,782,670			53,749,386
Accumulated deficit		(59,050,036	)		(56,558,552	)
Total stockholders’ deficit		(4,251,487	)		(2,793,558	)

Total liabilities and stockholders’ deficit	$	64,250		$	136,990

(1)

Derived from audited financial statements.

See Notes to Unaudited Consolidated Financial Statements.

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VISIUM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2023			2022			2023			2022
Net revenues	$	-		$	-		$	-		$	-

Operating expenses:
Selling, general and administrative		567,979			1,296,611			1,461,560			3,761,236
Development expense		73,755			78,289			175,707			274,614
Total Operating Expenses		641,734			1,374,900			1,637,267			4,035,850

Loss from Operations		(641,734	)		(1,374,900	)		(1,637,267	)		(4,035,850	)

Other income (expenses):
Loss on change in fair value of derivative liabilities		(50,384	)		(76,707	)		(84,246	)		(20,632	)
Derivative liability expense		(4,634	)		-			(62,773	)		-
Loss on extinguishment of debt		(15,068	)		-			(519,993	)		-
Interest expense		(20,265	)		(52,587	)		(187,205	)		(554,262	)
Total other income (expenses)		(90,354	)		(129,294	)		(854,217	)		(574,624	)

Net loss	$	(732,085	)	$	(1,504,194	)	$	(2,491,484	)	$	(4,610,474	)

Loss per common share basic and diluted	$	(0.16	)	$	(0.55	)	$	(0.72	)	$	(1.86	)

Weighted average common shares outstanding – basic and diluted		4,658,570			2,750,423			3,454,032			2,477,833

See Notes to Unaudited Consolidated Financial Statements.

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VISIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2023

(UNAUDITED)

For the three months ended March 31, 2023

	Preferred Stock - Series A $0.001 Par Value				Preferred Stock - Series B $0.001 Par Value				Preferred Stock - Series AA $0.001 Par Value				Common Stock $0.0001 Par Value				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance at December 31, 2022		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		3,986,103	$	398	$	54,304,833	$	(58,317,951	)	$	(3,997,400	)

Shares issued for consulting services														58,333		6		18,078					18,084
Shares issued as compensation to employees														230,000		23		71,277					71,300
Shares issued as compensation to directors and officers														520,002		52		161,148					161,200
Shares issued for conversion of notes payable														727,550		73		213,345					213,418
Commitment shares issued pursuant to financing														66,668		7		13,993					14,000
Net loss for the three months ended March 31, 2023																				(732,085	)		(732,085	)

Balance at March 31, 2023		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		5,588,656	$	559	$	54,782,670	$	(59,050,036	)	$	(4,251,487	)

For the nine months ended March 31, 2023

	Preferred Stock - Series A $0.001 Par Value				Preferred Stock - Series B $0.001 Par Value				Preferred Stock - Series AA $0.001 Par Value				Common Stock $0.0001 Par Value				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance at June 30, 2022		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		2,896,385	$	288	$	53,749,386		$	(56,558,552	)	$	(2,793,558	)

Shares issued for consulting services														69,815		7		36,949						36,956
Shares issued as compensation to employees														465,001		47		144,103						144,150
Shares issued as compensation to directors and officers														1,045,932		105		360,908						361,013
Warrants issued on extinguishment of debt																		186,972						186,972
Shares issued for conversion of notes payable and accrued interest														976,100		98		290,366						290,464
Commitment shares issued pursuant to financing														66,668		7		13,993						14,000
Shares issued for exercise of warrants														68,755		7		(7	)					0
Net loss for the nine months ended March 31, 2023																					(2,491,484	)		(2,491,484	)
Balance at March 31, 2023		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		5,588,656	$	559	$	54,782,670		$	(59,050,036	)	$	(4,251,487	)

See Notes to Unaudited Consolidated Financial Statements.

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VISIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022

(UNAUDITED)

For the three months ended March 31, 2022

	Preferred Stock - Series A $0.001 Par Value				Preferred Stock - Series B $0.001 Par Value				Preferred Stock - Series AA $0.001 Par Value				Common Stock $0.0001 Par Value				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance at December 31, 2021		13,992,340		13,992		1,327,670	$	1,328		1	$	0		2,681,534	$	268	$	52,469,274	$	(54,471,321	)	$	(1,984,045	)

Shares issued for consulting services														60,000		6		381,294					381,300
Shares issued as compensation														17,037		2		241,398					241,400
Amortization of deferred compensation																		40,524					40,524
Commitment Shares pursuant to financing														60,000		6		165,796					165,802
Net loss for the three months ended March 31, 2022																				(1,504,194	)		(1,504,194	)
Balance at March 31, 2022		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		2,818,571	$	282	$	53,300,700	$	(55,975,512	)	$	(2,659,210	)

For the nine months ended March 31, 2022

	Preferred Stock - Series A $0.001 Par Value				Preferred Stock - Series B $0.001 Par Value				Preferred Stock - Series AA $0.001 Par Value				Common Stock $0.0001 Par Value				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance at June 30, 2021		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		2,182,423	$	218	$	48,512,312		$	(51,365,037	)	$	(2,837,187	)

Shares issued for consulting services														120,123		12		1,110,619						1,110,631
Shares issued as compensation														82,222		8		1,059,392						1,059,400
Shares issued for conversion of notes payable														146,701		15		831,033						831,048
Commitment shares issued pursuant to financings														60,000		6		165,796						165,802
Shares issued pursuant to sale of common stock														222,222		22		1,499,978						1,500,000
Shares issued for exercise of warrants														4,879		1		(1	)					-
Amortization of deferred compensation																		121,572						121,572
Net loss for the nine months ended March 31, 2022																					(4,610,474	)		(4,610,474	)
Balance at March 31, 2022		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		2,818,571	$	282	$	53,300,700			(55,975,512	)	$	(2,659,210	)

See Notes to Unaudited Consolidated Financial Statements.

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VISIUM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Month Period Ended
	March 31,
	2023			2022
Cash flows from operating activities:
Net loss	$	(2,491,484	)	$	(4,610,474	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		542,149			2,170,031
Amortization of debt discount		83,218			388,842
Derivative liability expense		62,773			-
(Gain) loss on change in fair value of derivative liability		84,246			20,362
Amortization of deferred compensation		-			121,572
Loss on extinguishment of debt		519,993			-
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		37,812			35,092
Prepaid license fee		(17,500	)		52,500
Accrued interest		150,008			60,640
Discount on notes payable		-			13,958
Accrued compensation		576,045			5,265
Net cash used in operating activities		(452,740	)		(1,742,572	)

Cash flows from financing activities:
Proceeds from sale of common stock		-			1,500,000
Repayment of convertible notes payable		-			(115,000	)
Proceeds from convertible notes payable		140,000			810,000
Proceeds from promissory notes payable		150,000			-
Repayment of promissory notes payable		-			(225,000	)
Advances from officers		72,500			-

Net cash provided by financing activities		362,500			1,970,000

Net increase (decrease) in cash		(90,240	)		227,428

Cash, beginning of period		136,990			125,166

Cash, end of period	$	46,750		$	352,594

Supplemental disclosures of cash flow information:
Cash paid for interest	$	-		$	22,011
Cash paid for income taxes	$	-		$	-

Non-cash investing and financing activities:
Issuance of common stock for conversion of notes payable and accrued interest	$	290,464		$	831,048
Commitment shares issued for financing		14,000			165,802
Warrants issued on extinguishment of debt	$	186,972		$	-

See Notes to Unaudited Consolidated Financial Statements.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 1: ORGANIZATION, GOING CONCERN AND BASIS OF PRESENTATION

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, critical infrastructure security, and the Internet of Things (“IOT”).

On March 11 2021 JAJ Advisory, LLC (“JAJ Advisory”) was formed in the State of Virginia as a wholly owned subsidiary of the Company. JAJ Advisory was established to account for non-cybersecurity and data analytics related business activities that the Company may pursue.

On June 20, 2022, the Company held a special meeting of stockholders, pursuant to which the stockholders of the Company voted approved certain corporate actions, and the Company filed an amendment to its Articles of Incorporation with the State Department of Corporations in the State of Florida to effect the following changes, effective September 22, 2022:

(i)	reverse our common stock by a ratio of one thousand three hundred fifty for one (1,350:1) (the “Reverse Split”). The board of directors was authorized to implement the Reverse Split.

(ii)	Reduce the number of shares of common stock that the Company is authorized to issue to one billion (1,000,000,000) from ten billion (10,000,000,000).

The principal effects of the Reverse Split include the following:

●	the number of outstanding shares of the Company’s common stock and treasury stock decreased based on the Reverse Split ratio of 1,350:1;
●	the number of shares of the Company’s common stock held by individual stockholders decreased based on the Reverse Split ratio of 1.350, and the number of stockholders who own “odd lots” of less than 100 shares of our common stock increased;
●	the number of shares of the Company’s common stock reserved for issuance under our stock incentive plans are reduced proportionally based on the Reverse Split ratio of 1,350:1 (along with any other appropriate adjustments or modifications); and
●	the exercise price of our outstanding stock options and warrants and the conversion price of our outstanding convertible securities, including preferred stock, and the number of shares reserved for issuance upon exercise or conversion thereof adjusted in accordance with their terms based on the Reverse Split ratio of 1,350:1.

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis. For the nine months ended March 31, 2023 we had a net loss of $2,491,484, had net cash used in operating activities of $452,740 and had negative working capital of $4,251,487. 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.

Basis of Presentation

The unaudited interim consolidated financial information furnished herein reflects all adjustments, consisting only of normal recurring items, which in the opinion of management are necessary to fairly state Visium Technologies, Inc.’s (the “Company” or “we”, “us” or “our”) financial position, results of operations and cash flows for the dates and periods presented and to make such information not misleading. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to rules and regulations of the United States Securities and Exchange Commission (“SEC”), nevertheless, management of the Company believes that the disclosures herein are adequate to make the information presented not misleading.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended June 30, 2022, contained in the Company’s Annual Report on Form 10-K filed with the SEC on October 4, 2022. The results of operations for the nine months ended March 31, 2023, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending June 30, 2023.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

The fiscal year ends on June 30. References to fiscal year 2023, for example, refer to the fiscal year ending June 30, 2023.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles and include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements' the reporting amounts of revenues and expenses, and the valuation of shares issued for services during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions used in Cox, Ross & Rubinstein Binomial Tree stock-based compensation valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate and in the valuation allowance of deferred tax assets and derivative liability.

The COVID-19 pandemic and related developments have created and may continue to create significant uncertainty in global financial markets, which may decrease technology spending, depress demand for our products and harm our business and results of operations. As of the date of issuance of the financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates or judgments or revise the carrying value of our assets or liabilities. These estimates may change as new events occur and additional information is obtained, which could be recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.

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 nine months ended March 31, 2023 and year ended June 30, 2022.

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. The Company did not have cash on deposit in excess of such limit on March 31, 2023 and June 30, 2022.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of March 31, 2023 and June 30, 2022 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.

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.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Fair Value of Financial Instruments

The Company accounts for assets and liabilities measured at fair value on a recurring basis, in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

At March 31, 2023, the estimated fair values of the liabilities measured on a recurring basis are as follows:

	Fair Value Measurements at
	June 30, 2022:
	(Level 1)		(Level 2)		(Level 3)
Derivative liability – Convertible notes						182,316
Derivative liability – Warrants	$	-	$	-	$	-
Total derivative liability	$	-	$	-	$	182,316

The following is the Level 3 activity for the Company’s derivatives:

Derivative liability at June 30, 2020	$	35,297
Increase due to issuance of convertible note		62,773
Loss on change in fair value of derivative liability		84,246
Derivative liability at June 30, 2021	$	182,316

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 2022 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.

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.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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 March 31, 2023, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2022 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 2022-07, 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 and data analytics.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Recent Accounting Pronouncements

The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.

In August 2022, the FASB issued ASU 2022-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.

In May 2022, the FASB issued ASU 2022-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this new guidance will have on its financial statements.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Basic and Diluted Earnings Per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of shares of Common Stock outstanding during each period. Diluted earnings per share are computed using the weighted average number of shares of Common Stock and the dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of in-the-money stock options and warrants (calculated using the modified-treasury stock method) and conversion of other securities such as convertible debt or convertible preferred stock. Potential common shares that would be as follows:

	March 31,
	2023		2022
Weighted average common shares outstanding		3,454,032		2,424,513
Effect of dilutive securities-when applicable:
Convertible promissory notes		4,846,219		71,045
Preferred stock		11,348		11,348
Common stock options		2,222		5,926
Warrants		66,781		5,049
Fully diluted earnings per share—adjusted weighted-average shares and assumed conversions		8,380,602		2,517,881

NOTE 3: PREPAID LICENSE FEE

In April 2021, the Company entered into a two-year software license agreement to enable product development. The license fee is prepaid at a rate of $70,000 annually, beginning July 1 of each year. 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. As of March 31, 2023, the prepaid license fee was $17,500.

NOTE 4: DERIVATIVE LIABILITIES

Derivative liability – warrants

The Company issued warrants in connection with convertible notes payable issued in January, February, and July 2022. 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 a sufficient number of authorized and unissued shares will exist at the assessment date, the Company calculates a derivative liability associated with the warrants in accordance with FASB ASC Topic 815-40-25. Please note that these are derivatives but not recorded as the overall expense is immaterial.

Accounting for Derivative Warrant Liability

The Company’s derivative warrant instruments have been measured at fair value at March 31, 2023 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 March 31, 2023 and June 30, 2022 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 loss of $84,246 and $20,362 for the nine months ended March 31, 2023 and 2022, respectively in the Company’s consolidated statements of operations, under the caption “Loss on change of fair value of derivative liabilities”. These balances are reported on the consolidated balance sheet under the caption “Derivative liabilities”.

The Company has determined its derivative liabilities to be a Level 3 fair value measurements. The significant assumptions used in the Cox, Ross & Rubinstein Binomial Tree valuation of the derivatives are as follows:

	Nine months ended March 31,
	2023			2022
Effective exercise price	$	0.107 – $0.139		$	1.89 – $27.00
Effective market price	$	0.1945		$	3.645
Expected volatility		303.27	%		175.2% to 291.1	%
Risk-free interest		4.79	%		0.35%-2.28	%
Expected terms		60 - 193 days			60 - 915 days
Expected dividend rate		0	%		0	%

Changes in the derivative liabilities during the Nine Months Ended March 31, 2023 is follows:

Derivative liabilities at June 30, 2022	$	35,297
Initial derivative liability expense		62,773
Loss on change in fair value of derivative liabilities		84,246
Derivative liabilities at March 31, 2023	$	182,316

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 5: ACCRUED INTEREST PAYABLE

Changes in accrued interest payable during the Nine Months Ended March 31, 2023 is as follows:

Accrued interest payable at June 30, 2022	$	404,712
Interest expense accrued for the nine months ended March 31, 2023		90,564
Conversion of accrued interest into common stock		(61,200	)
Accrued interest payable at March 31, 2023	$	434,076

NOTE 6: CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

Convertible Notes Payable

At March 31, 2023 and June 30, 2022 convertible debentures consisted of the following:

	March 31,		June 30,
	2023		2022
Convertible notes payable	$	1,431,790	$	1,487,431
Discount on convertible notes		-		(412,944	)
Convertible notes, net		1,431,790		1,074,487

The Company had convertible promissory notes aggregating $1,431,790 and $1,074,487 at March 31, 2023 and June 30, 2022, respectively. The related accrued interest amounted to approximately $230,000 and $197,800 at March 31, 2023 and June 30, 2022, 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 $0.21 to $22,500 per share, as a result of the two reverse stock splits. At March 31, 2023, approximately $324,000 of convertible promissory notes had matured, are in default and remain unpaid. There are no punitive default provisions included in the terms of these convertible promissory notes.

The changes in the convertible notes payable balance is summarized below:

Convertible payable at June 30, 2022	$	1,487,431
Convertible notes issued during the nine months ended March 31, 2023		149,250
Conversion of convertible notes payable into common stock		(204,891	)
Convertible payable at March 31, 2023	$	1,431,790

In September 2022, we issued 138,667 warrants with a five year life, and a fixed exercise price of $1.35 per share, as part of a modification to three outstanding convertible notes payable. The Company evaluated these amendments under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the issuance of these warrants in exchange for deferring the interim interest payments that were due resulted in significant and consequential changes to the economic substance of the debt and thus resulted in accounting for these modifications as an extinguishment of the debt. Under ASC 470-50, the issuance of these warrants resulted in a loss on the extinguishment of debt, as follows:

Value of warrants issued	$	186,972
Write-off of unamortized debt discount		317,953
Loss on extinguishment of debt	$	504,925

During the nine months ended March 31, 2023 we recorded a loss on the conversion of convertible note totaling $15,068, which is recorded in the Consolidated Statement of Operations as loss on extinguishment of debt.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 6: CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE, continued

For the nine months ended March 31, 2023, the following summarizes the conversion of debt for common shares:

			Amount of		Amount of				Adjustment					Conversion
	Shares		Converted		Converted		Conversion		To					Price
Name	Issued		Principal		Interest		Expense		Fair Value			Total		Per Share
Talos Victory Fund		325,000	$	86,450	$	10,800	$	3,500	$	(12,920	)	$	87,830	$	0.27
FirstFire		260,000		31,250		21,600		1,750		18,226			72,826		0.28
Mast Hill		391,100		87,191		28,800		5,250		9,762			129,808		0.33
Total		976,100	$	204,891	$	61,200	$	10,500	$	13,873		$	290,464	$	0.30

Notes Payable

The Company had promissory notes aggregating $343,262 net of a discount of $11,738, and $205,000 at March 31, 2023 and June 30, 2022, respectively. The related accrued interest amounted to approximately $205,000 and $207,000 at March 31, 2023 and June 30, 2022, respectively. The notes payable bear interest at rates ranging from 0% to 16% per annum and are payable monthly. Promissory notes totaling $205,000 as of March 31, 2023 have matured, are in default, and remain unpaid.

In February 2023 the Company issued promissory notes totaling $150,000 to two accredited investors. The notes have a term of one year, and bear interest at 12%.

At March 31, 2023 and June 30, 2022 promissory notes consisted of the following:

	March 31,			June 30,
	2023			2022
Promissory notes payable	$	355,000		$	205,000
Discount on promissory notes payable		(11,738	)		-
Promissory notes payable, net	$	343,262		$	205,000

NOTE 7: STOCKHOLDERS’ DEFICIT

Common Stock

At March 31, 2023, the Company had 1,000,000,000 authorized common shares.

The Company effected a reverse split of our Common stock by a ratio of one thousand three hundred fifty for one (1,350:1). The board of directors of the Company was authorized to implement the reverse stock split effective September 22, 2022. The reverse stock split adjusted the then outstanding Common shares of the company from 3,916,144,800 common shares to a total of 2,896,396 common shares. This action also reduced the number of authorized common shares of the Company from 10,000,000,000 to 1,000,000,000. Unless otherwise noted, all references to common stock share and per share amounts have been adjusted to reflect the reverse split.

Issuances of Common Stock During the Nine Months Ended March 31, 2023

Convertible Notes Payable

During the nine months ended March 31, 2023 the Company issued 976,100 shares of its common stock related to the conversion of $290,464 of principal and accrued interest and conversion expense for three of its convertible notes payable, at an average contract conversion price of $0.30 per share. These convertible notes have terms that include fixed conversion prices, and therefore the notes were converted consistent with the contractual conversion prices of each note.

Stock Based Compensation

During the nine months ended March 31, 2023 the Company issued 1,045,932 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $361,013, or $0.35 per share, based on the share price at the time of the transactions.

During the nine months ended March 31, 2023 69,815 shares of its $0.0001 par value common stock vested to two consultants, as compensation under two separate consulting agreements. The shares were valued at $36,956, or $0.53 per share, based on the share price at the time of the transactions.

During the nine months ended March 31, 2023 the Company issued 465,001 shares of its $0.0001 par value common stock as compensation to its employees. The shares were valued at $144,150, or $0.31 per share, based on the share price at the time of the transaction.

Warrant Exercises

During the nine months ended March 31, 2023 the Company issued 68,755 shares of its $0.0001 par value common stock pursuant to two cashless exercises.

Commitment Shares

During the nine months ended March 31, 2023 the Company issued 66,668 shares of its $0.0001 par value common stock to two investors as commitment shares pursuant to the issuance of promissory notes. The shares were valued at $14,000, or $0.21 per share, the market price on the date of the issuance and was accounted for as discount on the related notes payable, which is being amortized over the term of the note.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 7: STOCKHOLDERS’ DEFICIT, continued

Preferred Stock

Series A and B issued and outstanding shares of the Company’s convertible preferred stock have a par value of $0.001. All classes rank(ed) prior to any class or series of the Company’s common stock as to the distribution of assets upon liquidation, dissolution or winding up of the Company or as to the payment of dividends. All preferred stock shall have no voting rights except if the subject of such vote would reduce the amount payable to the holders of preferred stock upon liquidation or dissolution of the company and cancel and modify the conversion rights of the holders of preferred stock as defined in the certificate of designations of the respective series of preferred stock.

Series A Convertible Preferred Stock

The Series A Preferred Stock has a stated value of $750.00 per share. Each one share of Series A Preferred Stock is convertible into one (1) share of Common Stock. In the event the Common Stock price per share is lower than $0.10 (ten cents) per share then the Conversion shall be set at $0.035 per share. The Common Stock shares are governed by Lock-Up/Leak-Out Agreements.

Series B Convertible Preferred Stock

Thirty million (30,000,000) shares of preferred stock were designated as a new Series B Preferred stock in April 2016. This new Series B Preferred Stock has a $0.001 par value, and each 300 shares is convertible into one share of the Company’s common stock, with a stated value of $375 per share.

Series AA Convertible Preferred Stock

In March 2018, the Company authorized and issued one share of Series AA convertible preferred stock which provides for the holder to vote on all matters as a class with the holders of Common Stock and each share of Series AA Convertible Preferred Stock shall be entitled to 51% of the common votes on any matters requiring a shareholder vote of the Company. Each one share of Series AA Convertible Preferred Stock is convertible into one (1) share of Common Stock. Mark Lucky, our CFO, is the holder of the one share of Series AA Convertible Preferred Stock.

Common Stock Warrants

In January and February 2021, we issued 2,268 warrants with a two year life, and fixed exercise prices ranging from $7.425 to $27.00 per share.

In July and October 2021 we issued 2,781 warrants with a three year life, and fixed exercise prices of $10.3957, $12.285, and $20.385.

In September 2022 we issued 138,667 warrants with a fair value of $186,972 and a five year life, and a fixed exercise price of $1.35 per share, as part of a modification to three outstanding convertible notes payable. The Company evaluated these amendments under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the issuance of these warrants in exchange for deferring the interim interest payments that were due resulted in significant and consequential changes to the economic substance of the debt and thus resulted in accounting for these modifications as an extinguishment of the debt. The Company recorded a loss of extinguishment of debt of $519,993. The Company used a binomial option pricing model to estimate the fair value of the warrants issued, using the following assumptions on the date that the warrants were issued:

Expected volatility		285.9	%
Expected term	5 years
Risk-free interest rate		3.54	%
Forfeiture Rate		0	%
Expected dividend yield		0	%

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 7: STOCKHOLDERS’ DEFICIT, continued

A summary of the status of the Company’s outstanding common stock warrants as of March 31, 2023 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		5,049		$	14.85
Granted		138,667		$	1.35
Exercised		(68,755	)		1.35
Forfeited		8,180	)		1.35
Balance at end of period		66,781		$	1.89

Warrants exercisable at end of period		66,781		$	1.89

The following table summarizes information about common stock warrants outstanding at March 31, 2023:

		Warrants Outstanding					Warrants Exercisable
Range of Exercise Price		Number Outstanding at March 31, 2023		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable at March 31, 2023		Weighted Average Exercise Price
$	1.35		64,000	4.42 Years	$	1.35		64,000	$	1.35
$	10.395		631	0.28 Years	$	10.395		631	$	10.395
$	12.285		1,339	1.51 Years	$	12.285		1,339	$	12.285
$	20.385		811	1.51 Years	$	20.385		811	$	20.385
			66,781	4.14 Years	$	1.89		66,781	$	1.89

As of March 31, 2023, the Company had $0 of unrecognized nonvested expenses related to these warrants.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 8 - STOCK-BASED COMPENSATION

The Company adopted a Stock Incentive 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 2021 Stock Incentive 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 11,852 shares at an average price of $20.25 with a fair value of $0.00. For the nine months ended March 31, 2023 and 2022, the Company did not issue any options to purchase shares, respectively. Upon exercise, shares of new common stock are issued by the Company.

For the nine months ended March 31, 2023 and 2022, the Company did not recognize any, respectively, of non-cash compensation expense (which would be 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 March 31, 2023, the Company had no unrecognized pre-tax non-cash compensation expense. 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 2,222 shares that have vested as of March 31, 2023.

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:

	Nine months ended March 31,			Year ended June 30,
	2023			2022
Expected volatility	370% - 497		%	370%-497		%
Expected term	4 Years			4 Years
Risk-free interest rate	0.76%-0.84		%	0.76%-0.84		%
Forfeiture Rate		0.00	%		0.00	%
Expected dividend yield		0.00	%		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 March 31, 2023 and June 30, 2022 and changes during the periods ending on that date is as follows:

			Weighted Average		Grant Date		Aggregate		Weighted Average
			Exercise		Fair		Intrinsic		Remaining
	Shares		Price		Value		Value		Term (Yrs)
Options
At June 30, 2022		2,222	$	27.00	$	-	$	0		3.08
Granted		-		-		-		-		-
Exercised		-		-		-		-		-
Forfeiture and cancelled		-		-				-		-
At March 31, 2023		2,222	$	27.00	$	-	$	0		3.08

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 8 - STOCK-BASED COMPENSATION, continued

The following table summarizes information about employee stock options outstanding at March 31, 2023:

Outstanding Options

Vested Options

Number

Outstanding

Weighted

Exercisable

Weighted

Averaged

March 31,

Remaining

Exercise

March 31,

Exercise

Remaining

Range of Exercise Price

2022

Life

Price

2022

Price

Life

27.00

2,222

3.08

27.00

2,222

27.00

3.08

Outstanding options

2,222

3.08

27.00

2,222

27.00

3.08

As of March 31, 2023, the Company had approximately $0 of unrecognized pre-tax non-cash compensation expense.

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 nine months ended March 31, 2023 is presented in the following table:

	For the nine months ended
	March 31, 2023
				Weighted
				Average
				Grant Date
	Shares			Fair Value
Unvested at June 30, 2022		7,407		$	2.13
Granted		3,405,000		$	0.31
Forfeited		(40,000	)	$	0.31
Vested		(1,580,741	)	$	0.34
Unvested at March 31, 2023		1,791,666		$	0.31

Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of March 31, 2023 was $555,417 and is expected to be recognized over a weighted average period of 0.75 years. The recognition of expense related to vested shares is accounted for as stock-based consulting expense and stock-based compensation expense for a total of $542,149 for the nine months ended March 31, 2023.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 9: RELATED PARTY TRANSACTIONS

Equity transactions with related parties are described in Note 7.

From time to time we have borrowed funds from Mr. Mark Lucky, our Chief Executive Officer and from certain of our directors, for working capital. The advances were payable upon demand and were interest free. At March 31, 2023 there was $72,500 outstanding of such advances made to the Company.

NOTE 10: 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 March 31, 2023.

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 March 31, 2023, and based on the assessment there are no probable loss contingencies requiring accrual or disclosures within its financial statements.

License Contingent Consideration

Our license agreement with The MITRE Corporation includes provisions for a royalty payment on revenues collected of 6%. As of March 31, 2023, we have not generated any revenue related to these license agreements.

Legal Claims

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 11: SUBSEQUENT EVENTS

In April 2023 our directors and officers restricted stock vested 173,334 shares of our $0.0001 par value common stock, valued at $53,734, or an average price per share of $0.31.

In April 2023 our employees restricted stock vested 76,667 shares of our $0.0001 par value common stock to three employees as compensation, valued at $27,167, or an average price per share of $0.35.

In April 2023 the Company raised $40,250 through the sale of 2,012,500 shares of its $0.0001 par value common stock at a price of $0.02 per share.

In April 2023 our consultants restricted stock vested 29,167 shares of our $0.0001 par value common stock as compensation, valued at $9,042, or an average price per share of $0.31.

In April 2023 the Company issued 2,722,941 shares of its $0.0001 par value common stock upon the conversion of principal and interest of $219,058 of its outstanding convertible notes, valued at $0.084 per share.

In May 2023 the Company announced that it repaid and satisfied approximately $93,000 of principal and accrued interest related to its toxic convertible note. The note was initially issued in October, 2022 and was paid off with cash advances from the Company’s officer and directors.

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ITEM 2. Management’s Discussion and Analysis and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See ‘‘Cautionary Statement Regarding Forward Looking Information’’ elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

Visium Technologies, Inc. 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 which the Company has rebranded as TruContext^TM.

Plan of Operation

Visium operates in the traditional cyber security and data analytics 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 addition, the Company has partnered with value-added resellers 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.

COVID-19 Update

The COVID-19 pandemic and related developments have caused and may continue to cause new and potential customers to experience rapidly changing conditions and disruptions to their businesses. It can be difficult to predict customer demand, especially as our customers’ priorities, resources and economic outlook change, along with other shifting market conditions. These shifts have occurred and may in the future occur more quickly than we anticipate.

Employees

As of March 31, 2023, we had six (6) full time employees.

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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 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.

Our principal offices are located at 4094 Majestic Lane, Suite 360, Fairfax, Virginia 22033. Our telephone number is (703) 273-0383.

Our common stock is quoted on the OTC Pink under the symbol “VISM”.

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VISIUM TECHNOLOGIES, INC.

RESULTS OF OPERATIONS

Three and Nine Month Periods Ended March 31, 2023 and 2022

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2023			2022			2023			2022
Net revenues	$	-		$	-		$	-		$	-

Operating expenses:
Selling, general and administrative		567,979			1,296,611			1,461,560			3,761,236
Development expense		73,755			78,289			175,707			274,614
Total Operating Expenses		641,734			1,374,900			1,637,267			4,035,850

Loss from Operations		(641,734	)		(1,374,900	)		(1,637,267	)		(4,035,850	)

Other income (expenses):
Gain (loss) on change in fair value of derivative liabilities		(50,384	)		(76,707	)		(84,246	)		(20,632	)
Derivative liability expense		(4,634	)		-			(62,773	)		-
Gain (loss) on extinguishment of debt		(15,068	)		-			(519,993	)		-
Interest expense		(20,265	)		(52,587	)		(187,205	)		(554,262	)
Total other income (expenses)		(90,354	)		(129,294	)		(854,217	)		(574,624	)

Net loss	$	(732,085	)	$	(1,504,194	)	$	(2,491,484	)	$	(4,610,474	)

Selling, General, and Administrative Expenses

Nine Month Period Ended March 31, 2023

For the nine months ended March 31, 2023, selling, general and administrative expenses were $1,461,560 as compared to $3,761,236 for the nine months ended March 31, 2022. For the nine month periods ended March 31, 2023 and 2022 selling, general and administrative expenses consisted of the following:

	Nine Months Ended
	March 31,
	2023		2022
Accounting expense	$	45,450	$	50,866
Consulting fees		35,020		24,575
Salaries		772,858		722,283
Legal and professional fees		30,652		381,333
Travel expense		249		34
Occupancy expense		1,498		582
Telephone expense		3,395		3,070
Marketing expense		1,066		203,527
Website expense		61		23,425
Investor relations expense		13,688		0
Stock based consulting expense		36,989		1,075,132
Stock based compensation expense		505,159		1,216,472
Other		15,475		59,937
	$	1,461,560	$	3,761,236

The decrease in selling, general and administrative expenses of $2,299,676 during fiscal 2023, when compared with the prior year, is primarily due to a decrease in stock-based consulting expense of $711,313, a decrease in stock-based compensation expense of $1,038,143, lower legal and professional fees expense of $350,681, and lower marketing expense of $202,461, offset by higher salaries expense of $50,575 and higher investor relations expense of $13,688.

We believe that our selling, general, and administrative expenses will be flat to slightly higher over the rest of the current fiscal year, driven by increased expenses related to an increase in our business activity over the remainder of fiscal 2023.

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Development Expense

	Nine Months Ended
	March 31,				%
	2023		2022		Change
Development expense	$	175,707	$	274,614	(36	%)

Development expense represents the expense to further enhance and commercialize CyGraph. We believe that we will incur an additional $50,000 in development expense during the remainder of fiscal 2023.

Change in Fair Value of Derivative Liabilities

	Nine Months Ended
	March 31,						%
	2023			2022			Change
Gain (loss) on change in fair value of derivative liabilities	$	(84,246	)	$	(20,362	)	(314	%)

The change 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 driven by the change in the per share price of the Company’s common stock.

Derivative Liability Expense

	Nine Months Ended
	March 31,					%
	2023			2022		Change
Derivative liability expense	$	(62,773	)	$	-		N/A

The Company issued convertible notes in October 2022 and March 2023which provisions contained variable price conversion terms, resulting in a derivative liability expense, measured as of the issuance date of the notes.

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Interest Expense

	Nine Months Ended
	March 31,				%
	2023		2022		Change
Interest expense	$	187,205	$	554,262	(66	%)

Interest expense represents stated interest of notes and convertible notes payable as well as amortization of debt discount. Interest expense is lower for the Nine Months Ended March 31, 2023 due to lower debt discount amortization of $319,329 as compared to the prior year period.

Loss on extinguishment of debt

	Nine Months Ended
	March 31,				%
	2023		2022		Change
Loss on extinguishment of debt	$	519,993	$	-		N/A

In September 2022 we issued 138,667 warrants with a five year life, and a fixed exercise price of $1.35 per share, as part of a modification to three outstanding convertible notes payable. The Company evaluated these amendments under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the issuance of these warrants in exchange for deferring the interim interest payments that were due resulted in significant and consequential changes to the economic substance of the debt and thus resulted in accounting for these modifications as an extinguishment of the debt. Under ASC 470-50, the issuance of these warrants resulted in a loss on the extinguishment of debt, as follows:

Value of warrants issued	$	186,972
Write-off of unamortized debt discount		317,953
Loss on extinguishment of debt	$	504,925

A recap of the Loss on extinguishment of debt follows:

Loss on extinguishment of debt related to warrants	$	504,925
Loss on extinguishment of debt related to note conversions		15,068
	$	519,993

Three Month Period Ended March 31, 2023

For the three months ended March 31, 2023, selling, general and administrative expenses were $567,979 as compared to $1,296,611 for the three months ended March 31, 2022. For the three months ended March 31, 2023 and 2022 selling, general and administrative expenses consisted of the following:

	Three Months Ended
	March 31,
	2023		2022
Accounting expense	$	20,093	$	14,821
Consulting fees		25,020		15,725
Salaries		237,578		285,138
Legal and professional fees		14,752		103,303
Travel expense		0		0
Occupancy expense		442		204	)
Telephone expense		1,245		968
Marketing expense		774		200,148
Website expense		21		3,929
Stock based consulting expense		13,400		0
Stock based compensation expense		18,083		369,800
Other		232,500		293,424
	$	567,979	$	1,296,611

The decrease in selling, general and administrative expenses of $728,632 for the three months ended March 31, 2023, when compared with the prior year period, is primarily due to a decrease in stock-based consulting expense of $351,717, a decrease in stock-based compensation expense of $60,924, lower salaries expense of $47,560, lower website expense of $3,908, and lower legal and professional fees expense of $88,551, offset by higher investor relations expense of $13,400.

Development Expense

	Three-Months Ended
	March 31,				%
	2023		2022		Change
Development expense	$	73,755	$	78,289	(6	%)

Change in Fair Value of Derivative Liabilities

	Three-Months Ended
	March 31,						%
	2023			2022			Change
Gain (loss) on change in fair value of derivative liabilities	$	(50,384	)	$	(76,707	)		(34	)%

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Interest Expense

		Three-Months Ended
		March 31,								%
		2023

VISIUM TECHNOLOGIES, INC. [VISM] Filings
10-Q	[2023-05-15]
10-Q	[2023-02-14]
10-Q	[2022-11-18]
10-K	[2022-10-04]
10-Q	[2022-05-13]
S-1	[2022-03-15]
10-Q	[2022-01-20]
10-Q	[2021-11-08]
10-K	[2021-10-13]
10-Q	[2021-05-17]
10-Q	[2021-02-16]
10-Q	[2020-11-12]
10-K	[2020-10-09]
10-Q	[2020-06-29]
10-Q	[2020-02-12]
10-Q	[2019-11-14]
10-K	[2019-09-27]
10-Q	[2019-05-13]
10-Q	[2019-02-13]
10-Q	[2018-11-14]
10-K	[2018-08-20]
10-Q	[2018-05-10]
10-Q	[2018-04-05]
10-Q	[2018-04-05]
10-Q	[2018-04-05]
10-Q	[2018-04-05]
10-Q	[2018-04-05]
10-Q	[2018-04-05]
10-Q	[2018-02-09]
10-Q	[2017-11-14]
10-K	[2017-09-28]
10-Q	[2017-05-15]
10-Q	[2017-02-13]
10-Q	[2016-11-14]
10-K	[2016-10-13]
10-Q	[2016-05-16]
10-Q	[2016-05-02]
10-Q	[2016-05-02]
10-K	[2016-04-11]
10-K	[2016-02-03]
10-K	[2015-09-01]
10-Q	[2013-05-20]