The following discussion of our financial condition and results of operations
should be read in conjunction with the financial statements and related notes
included elsewhere in this report. Certain statements in this discussion and
elsewhere in this report constitute forward-looking statements. See ''Cautionary
Statement Regarding Forward Looking Information'' elsewhere in this report.
Because this discussion involves risk and uncertainties, our actual results may
differ materially from those anticipated in these forward-looking statements.
Overview
Visium Technologies, Inc. is a Florida corporation with offices based in
Fairfax, Virginia, focused on building a global cybersecurity business, by
advancing technology and cybersecurity tools and services to support enterprises
in protecting their most valuable assets - their data, on their networks, in the
cloud, and Internet of Things ("IoT").
Visium is a provider of cyber security automation, analytics and visualization.
Visium operates in the traditional cyber security space, as well as in the
cloud-based technology and Internet of Things ("IOT") spaces. Visium provides
cybersecurity technology solutions, tools and services to support commercial
enterprises and governments ability to protect their data. Visium's CyGraph
technology provides visibility, advanced cyber monitoring intelligence,
analytics and automation to help reduce risk, simplify cyber security and
deliver better security outcomes.
In March 2019, Visium entered into a software license agreement with MITRE
Corporation to license a patented technology, known as CyGraph, a tool for cyber
warfare analytics, visualization and knowledge management. CyGraph provides
advanced analytics for cybersecurity situational awareness that is scalable,
flexible and comprehensive.
Employees
At May 13, 2022, we had 8 full time employees.
Our principal offices are located at 4094 Majestic Lane, Suite 360, Fairfax,
Virginia 22033. Our telephone number is (703) 273-0383.
Our common stock is quoted on the OTC Pink under the symbol "VISM".
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VISIUM TECHNOLOGIES, INC.
RESULTS OF OPERATIONS
Three and Nine Month Periods Ended March 31, 2022 and 2021
Three Months Ended Nine Months Ended
March 31, March 31,
2022 2021 2022 2021
Net revenues $ - $ 25,000 $ - $ 25,000
Operating expenses:
Selling, general and
administrative $ 1,296,611 $ 2,736,524 $ 3,761,236 $ 3,098,235
Development expense 78,289 37,206 274,614 143,200
Total Operating Expenses 1,374,900 2,773,730 4,035,850 3,241,435
Loss from Operations (1,374,900 ) (2,748,730 ) (4,035,850 ) (3,216,435 )
Other income (expenses):
Gain (loss) on change in
fair value of derivative
liabilities (76,707 ) 1,405,081 (20,362 ) 855,587
Derivative liability expense - (1,059,282 ) (1,059,282 )
Warrant exercise expense - - - (211,411 )
Gain (loss) on
extinguishment of debt - 28,863 - (180,001 )
Interest expense (52,587 ) (171,575 ) (554,262 ) (247,579 )
Total other income
(expenses) (129,294 ) (203,087 ) (574,624 ) (842,686 )
Net loss $ (1,504,194 ) $ (2,545,643 ) $ (4,610,474 ) $ (4,059,121 )
Selling, General, and Administrative Expenses
Nine Month Period Ended March 31, 2022
For the nine months ended March 31, 2022, selling, general and administrative
expenses were $3,761,236 as compared to $3,098,235 for the nine months ended
March 31, 2021. For the nine month periods ended March 31, 2022 and 2021
selling, general and administrative expenses consisted of the following:
Nine Months Ended
March 31,
2022 2021
Accounting expense $ 50,866 $ 42,488
Consulting fees 24,575 49,900
Salaries 722,283 261,500
Legal and professional fees 381,333 113,274
Travel expense 34 1,086
Occupancy expense 582 184
Telephone expense 3,070 2,700
Marketing expense 203,527 763
Website expense 23,425 4,554
Investor relations expense - 10,000
Stock based consulting expense 1,196,704 125,750
Stock based compensation expense 1,094,900 2,464,000
Other
59,937 22,040
$ 3,761,236 $ 3,098,235
The increase in selling, general and administrative expenses of $656,414 during
fiscal 2022, when compared with the prior year, is primarily due to an increase
in salaries of $460,824, higher legal and professional fees of $268,055, higher
marketing expense of $202,665, and higher website expense of $18,871, offset by
lower overall stock-based compensation of $298,146, lower consulting expense of
$29,750, and lower investor relations expense of $10,000.
We believe that our selling, general, and administrative expenses will decline
over the rest of the current fiscal year due to lower stock based compensation
expense, offset by increased expenses related to an increase our business
activity over the remainder of fiscal 2022.
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Development Expense
Nine-Months Ended
March 31, %
2022 2021 Change
Development expense $ 274,614 $ 143,200 79.7 %
Development expense represents the expense to further enhance and commercialize
CyGraph. We believe that we will incur an additional $50,000 of development
expense during the remainder of fiscal 2022.
Change in Fair Value of Derivative Liabilities
Nine-Months Ended
March 31, %
2022 2021 Change
Gain (loss) on change in fair value of derivative (102.4 %)
liabilities $ (20,362 ) $ 855,587
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.
Interest Expense
Nine-Months Ended
March 31, %
2022 2021 Change
Interest expense $ 554,262 $ 247,579 123.9 %
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, 2022 due to lower debt discount amortization as
compared to the prior year period.
Warrant exercise expense
Nine-Months Ended
March 31, %
2022 2021 Change
Warrant exercise expense $ - $ (211,411 ) N/A
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Three Month Period Ended March 31, 2022
For the three months ended March 31, 2022, selling, general and administrative
expenses were $1,296,611 as compared to $2,736,524 for the three months ended
March 31, 2021. For the three months ended March 31, 2022 and 2021 selling,
general and administrative expenses consisted of the following:
Three Months Ended
March 31,
2022 2021
Accounting expense $ 14,821 $ 2,500
Consulting fees 15,725 39,900
Salaries 285,138 93,500
Legal and professional fees 103,303 77,214
Travel expense - -
Occupancy expense 204 169
Telephone expense 969 900
Marketing expense 200,148 263
Website expense 3,929 2,991
Investor relations expense - -
Stock based consulting expense 410,324 86,750
Stock based compensation expense 252,900 2,419,000
Other
9,151 13,337
$ 1,296,611 $ 2,736,524
The decrease in selling, general and administrative expenses of $1,451,282
during the fiscal quarter ended March 31, 2022, when compared with the prior
year period is primarily due to a decrease in stock-based compensation of
$2,166,100, and a decrease in consulting expense of $28,600 offset by higher
salaries expense of $191,679, higher legal and professional fees of $26,085,
higher accounting expense of $12,022, and higher marketing expense of $199,786.
Development Expense
Three-Months Ended
March 31, %
2022 2021 Change
Development expense $ 78,289 $ 37,206 681 %
Change in Fair Value of Derivative Liabilities
Three-Months Ended
March 31, %
2022 2021 Change
Gain (loss) on change in fair value of
derivative liabilities $ (76,707 ) $ 1,405,081 (106 )%
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.
Interest Expense
Three-Months Ended
March 31, %
2022 2021 Change
Interest expense $ 52,587 $ 171,575 (48.1 )%
Interest expense represents stated interest of notes and convertible notes
payable as well as amortization of debt discount. Interest expense is lower for
the three months ended March 31, 2022 due to lower principal balances and lower
debt discount amortization as compared to the prior year period.
Liquidity and Capital Resources
Balance at
March 31, 2022 June 30, 2021
Cash $ 352,594 $ 125,166
Accounts payable and accrued expenses (460,895 ) (425,804 )
Accrued compensation (677,794 ) (672,529 )
Notes, convertible notes, and accrued interest
payable $ (1,671,289 ) $ (1,735,057 )
We do not have any material commitments for capital expenditures.
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The objective of liquidity management is to ensure that we have ready access to
sufficient funds to meet commitments and effectively implement our growth
strategy. Our primary sources are financing activities such as the issuance of
notes payable and convertible notes payable. In the past, we have mostly relied
on debt and equity financing to provide for our operating needs.
We cannot ascertain that we have sufficient funds from operations to fund our
ongoing operating requirements through June 30, 2022. We may need to raise funds
to enhance our working capital and use them for strategic purposes. If such need
arises, we intend to generate proceeds from either debt or equity financing.
We intend to finance our operations using a mix of equity and debt financing. We
do not anticipate incurring capital expenditures for the foreseeable future. We
anticipate that we will need to raise approximately $180,000 per year in the
near term to finance the recurring costs of being a publicly-traded company. In
the long-term, we anticipate we will need to raise a substantial amount of
capital to complete an acquisition. We are unable to quantify the resources we
will need to successfully complete an acquisition. If these funds cannot be
obtained, we may not be able to consummate an acquisition or merger, and our
business may fail as a result.
Going Concern
The accompanying financial statements have been prepared on a going concern
basis. The Company has used net cash in its operating activities of $1,742,572
and $603,109 during the nine-month periods ended March 31, 2022 and 2021,
respectively, and has a working capital deficit of approximately $2.4 million
and $2.8 million at March 31, 2022 and June 30, 2021, 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 target. 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.
Nine Months ended March 31, 2022
Net cash used in operations during the nine months ended March 31, 2022
increased by approximately $1,139,463 or 189% from the same period during fiscal
year 2021. The increase in cash used in operations is primarily due to the
increase in product development expenses, cash paid for legal and professional
fees , and consulting and business development expense. This cash was obtained
through the sale of common stock that netted the Company $1,500,000, and the
sale of three convertible notes totaling $810,000.
Nine Months ended March 31, 2021
Net cash used in operations during the nine months ended March 31, 2021
increased by approximately $80,000 or 81% from the same period during fiscal
year 2020. The increase in cash used in operations is primarily due to the
increase in consulting and business development expense and cash paid for legal
and professional fees. This cash was obtained through the sale of four
promissory notes that netted the Company $360,000.
Capital Raising Transactions
Sale of Common Stock
We generated net proceeds of $1,500,000 from the sale of 300,000,000 shares of
common stock at a per share price of $0.005 during the nine-month period ended
March 31, 2022.
We generated proceeds of $870,000 from the sale of three convertible notes.
Pursuant to this transaction, the Company issued 81,000,000 commitment shares of
our $0.0001 par value common stock, valued at $210,600, or $0.0026 per share.
Other outstanding obligations at March 31, 2022
Convertible Notes Payable
The Company had convertible promissory notes aggregating $930,031 outstanding at
March 31, 2022. The accrued interest amounted to approximately $170,000 as of
March 31, 2022. The Convertible Notes Payable bear interest at rates ranging
between 0% and 18% per annum. Interest is generally payable monthly. The
Convertible Notes Payable are generally convertible at rates ranging between
$0.0019 and $22,500 per share, at the holders' option. At March 31, 2022, all
convertible promissory notes have matured and are in default.
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Convertible notes payable to ASC Recap LLC
On July 22, 2013 and May 6, 2014, the Company issued to ASC Recap LLC ("ASC")
two convertible promissory notes with principal amounts of $25,000 and $125,000,
respectively. These two notes were issued as a fee for services under a 3(a)10
transaction that was never consummated and therefore there was no performance by
ASC to earn the notes. As a result, while the Company continues to carry the
balance of these notes on its balance sheet, it does not believe the notes
payable balances are owed. The July 22, 2013 note matured on March 31, 2014 and
a balance of $22,965 remains unpaid. The May 6, 2014 note matured on May 6, 2016
and remains unpaid. The notes are convertible into the common stock of the
Company at any time at a conversion price equal to 50% of the lowest closing bid
price of our common stock for the twenty days prior to conversion.
Notes Payable
The Company had promissory notes aggregating $205,000 at March 31, 2022. The
related accrued interest amounted to approximately $199,000 at March 31, 2022.
The Notes Payable bear interest at rates ranging between 8% and 16% per annum.
Interest is generally payable monthly. All promissory notes have matured as of
March 31, 2022.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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