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, 2024

 

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, 2024, was 188,218,508.

 

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 6, 2023. 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.

 

 
2

 

 

vism_10qimg2.jpg

 

VISIUM TECHNOLOGIES, INC. AND SUBSIDIARIES

 

INDEX

 

PART I - FINANCIAL INFORMATION

 

4

 

Item 1. Financial Statements

 

4

 

Consolidated Balance Sheets – March 31, 2024 (unaudited) and June 30, 2023

 

3

 

Consolidated Statements of Operations - Three and Nine Months ended March 31, 2024 and 2023 (unaudited)

 

5

 

Consolidated Statements of Changes in Stockholders’ Deficit (unaudited) – Three and Nine Months ended March 31, 2024 and 2023

 

6

 

Consolidated Statements of Cash Flows - Nine Months Ended March 31, 2024 and 2023 (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

 

30

 

Item 4. Controls and Procedures

 

26

 

PART II - OTHER INFORMATION

 

31

 

Item 1. Legal Proceedings.

 

31

 

Item 1A. Risk Factors.

 

31

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

31

 

Item 3. Defaults Upon Senior Securities.

 

31

 

Item 4. Mine Safety Disclosures.

 

31

 

Item 5. Other Information.

 

31

 

Item 6. Exhibits

 

32

 

SIGNATURES

 

33

 

 

 
3

Table of Contents

  

PART I - FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

Visium Technologies, Inc.

CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

2024

 

 

June 30,

2023(1)

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$8,247

 

 

$9,982

 

Prepaid license fee

 

 

19,446

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

27,693

 

 

 

9,982

 

 

 

 

 

 

 

 

 

 

Total assets

 

$27,693

 

 

$9,982

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$1,062,823

 

 

$845,502

 

Accrued compensation

 

 

1,833,529

 

 

 

1,371,879

 

Due to officer

 

 

178,633

 

 

 

99,578

 

Accrued interest

 

 

512,621

 

 

 

548,041

 

Convertible notes payable, net of discount of $10,984 and $0 as of March 31, 2024 and June 30, 2023, respectively

 

 

675,924

 

 

 

937,576

 

Derivative liabilities

 

 

23,211

 

 

 

80,707

 

Notes payable, net of discount of $14,866 and $26,805 as of March 31, 2024 and June 30, 2023, respectively

 

 

650,603

 

 

 

380,013

 

Total current liabilities

 

 

4,937,344

 

 

 

4,263,296

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

Series A Convertible Stock ($0.001 par value; 20,000,000 shares authorized, 13,992,340 shares issued and outstanding as of March 31, 2024 and June 30, 2023, respectively)

 

 

13,992

 

 

 

13,992

 

Series B Convertible Stock ($0.001 par value 30,000,000 shares authorized, 1,327,670 shares issued and outstanding as of March 31, 2024 and June 30, 2023, respectively)

 

 

1,328

 

 

 

1,328

 

Series C Convertible Stock ($0.001 par value 30,000 shares authorized, no shares issued and outstanding as of March 31, 2024 and 0 shares issued and outstanding as of June 30, 2023

 

 

-

 

 

 

-

 

Series AA Convertible Stock ($0.001 par value; 1 share authorized, 1 share issued and outstanding as of March 31, 2024 and June 30, 2023, respectively)

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value, 1,000,000,000 shares authorized: 126,480,567 shares issued and 126,472,250 outstanding at March 31, 2024, and 37,199,647 shares issued and 29,844,713 outstanding at June 30, 2023, respectively (See Note 7)

 

 

12,648

 

 

 

2,987

 

Additional paid in capital

 

 

57,836,980

 

 

 

55,597,779

 

Accumulated deficit

 

 

(62,774,599)

 

 

(59,869,400)

Total stockholders’ deficit

 

 

(4,909,651)

 

 

(4,253,314)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 

$27,693

 

 

$9,982

 

 

(1) Derived from audited financial statements.

 

See Notes to Unaudited Consolidated Financial Statements.

 

 
4

Table of Contents

  

Visium Technologies, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net revenues

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Selling, general and administrative

 

 

399,604

 

 

 

567,979

 

 

 

1,990,912

 

 

 

1,461,560

 

     Development expense

 

 

19,447

 

 

 

73,755

 

 

 

67,256

 

 

 

175,707

 

     Total Operating Expenses

 

 

419,051

 

 

 

641,734

 

 

 

2,058,168

 

 

 

1,637,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(419,051 )

 

 

(641,734 )

 

 

(2,058,168 )

 

 

(1,637,267 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Gain (loss) on change in fair value of

     derivative liabilities

 

 

24,807

 

 

 

(50,384 )

 

 

57,496

 

 

 

(84,246 )

     Derivative liability expense

 

 

-

 

 

 

(4,634 )

 

 

-

 

 

 

(62,773 )

     Loss on extinguishment of debt

 

 

(9,106 )

 

 

(15,068 )

 

 

(21,141 )

 

 

(519,993 )

     Interest expense

 

 

(74,712 )

 

 

(20,265 )

 

 

(253,256 )

 

 

(187,205 )

Total other income (expenses)

 

 

(59,011 )

 

 

(90,354 )

 

 

(216,901 )

 

 

(854,217 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(478,062 )

 

 

(732,085 )

 

 

(2,275,069 )

 

 

(2,491,484 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock deemed dividend

 

 

(145,670 )

 

 

-

 

 

 

(630,130 )

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$(623,732 )

 

$(732,085 )

 

$(2,905,199 )

 

$(2,491,484 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share basic and diluted

 

$(0.01 )

 

$(0.16 )

 

$(0.04 )

 

$(0.72 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic and diluted

 

 

108,132,383

 

 

 

4,658,570

 

 

 

74,327,012

 

 

 

3,454,032

 

 

See Notes to Unaudited Consolidated Financial Statements.

 

 
5

Table of Contents

  

VISIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2024

(UNAUDITED)

 

For the three months ended March 31, 2024

 

 

 

 

Preferred

 

 

Preferred

 

 

Preferred

 

 

Preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock -

 

 

Stock -

 

 

Stock -

 

 

Stock -

 

 

Common

 

 

 

 

 

 

 

 

 

Series A

 

 

Series B

 

 

Series C

 

 

Series AA

 

 

Stock

 

 

 

 

 

 

 

 

 

$0.001

 

 

$0.001

 

 

$0.001

 

 

$0.001

 

 

$0.001

 

 

Additional

 

 

 

 

Total

 

 

 

Par Value

 

 

Par Value

 

 

Par Value

 

 

Par Value

 

 

Par Value

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance at December 31, 2023

 

 

13,992,340

 

 

$13,992

 

 

 

1,327,670

 

 

$1,328

 

 

 

-

 

 

$-

 

 

 

1

 

 

$0

 

 

 

96,501,142

 

 

$9,652

 

 

$57,400,982

 

 

$(62,150,867)

 

$(4,724,913)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for consulting services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,054,167

 

 

 

705

 

 

 

111,082

 

 

 

 

 

 

 

111,787

 

Shares issued for conversion of notes payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,916,941

 

 

 

2,291

 

 

 

179,246

 

 

 

 

 

 

 

181,537

 

Deemed dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

145,670

 

 

 

(145,670)

 

 

-

 

Net loss for the three months ended March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(478,062)

 

 

(478,062)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2024

 

 

13,992,340

 

 

$13,992

 

 

 

1,327,670

 

 

$1,328

 

 

 

-

 

 

$-

 

 

 

1

 

 

$0

 

 

 

126,472,250

 

 

$12,648

 

 

$57,836,980

 

 

$(62,774,599)

 

$(4,909,651)

 

For the nine months ended March 31, 2024

 

 

 

Preferred

 

 

Preferred

 

 

Preferred

 

 

Preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock -

 

 

Stock -

 

 

Stock -

 

 

Stock -

 

 

Common

 

 

 

 

 

 

 

 

 

 

 

 

Series A

 

 

Series B

 

 

Series C

 

 

Series AA

 

 

Stock

 

 

 

 

 

 

 

 

 

 

 

 

$0.001

 

 

$0.001

 

 

$0.001

 

 

$0.001

 

 

$0.001

 

 

Additional

 

 

 

 

 

Total

 

 

 

Par Value

 

 

Par Value

 

 

Par Value

 

 

Par Value

 

 

Par Value

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance at June 30, 2023

 

 

13,992,340

 

 

$13,992

 

 

 

1,327,670

 

 

$1,328

 

 

 

-

 

 

$-

 

 

 

1

 

 

$0

 

 

 

29,844,713

 

 

$2,987

 

 

$55,597,779

 

 

$(59,869,400)

 

$(4,253,314)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for consulting services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,184,166

 

 

 

1,318

 

 

 

416,569

 

 

 

 

 

 

 

417,887

 

Shares issued as compensation to employees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,320,000

 

 

 

532

 

 

 

88,875

 

 

 

 

 

 

 

89,407

 

Shares issued as compensation to directors and officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,960,000

 

 

 

3,096

 

 

 

517,528

 

 

 

 

 

 

 

520,624

 

Shares issued for conversion of notes payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,163,371

 

 

 

4,715

 

 

 

586,099

 

 

 

 

 

 

 

590,814

 

Deemed dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

630,130

 

 

 

(630,130)

 

 

-

 

Net loss for the nine months ended March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,275,069)

 

 

(2,275,069)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2024

 

 

13,992,340

 

 

$13,992

 

 

 

1,327,670

 

 

$1,328

 

 

 

-

 

 

$-

 

 

 

1

 

 

$0

 

 

 

126,472,250

 

 

$12,648

 

 

$57,836,980

 

 

$(62,774,599)

 

$(4,909,651)

 

See Notes to Unaudited Consolidated Financial Statements.

 

 
6

Table of Contents

 

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 CASH FLOWS

(Unaudited)

 

 

 

Nine-months ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(2,275,069 )

 

$(2,491,484 )

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

1,027,918

 

 

 

542,149

 

Amortization of debt discount

 

 

32,355

 

 

 

83,218

 

Derivative liability expense

 

 

-

 

 

 

62,773

 

(Gain) loss on change in fair value of derivative liability

 

 

(57,496 )

 

 

84,246

 

Loss on extinguishment of debt

 

 

21,141

 

 

 

519,993

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

236,568

 

 

 

37,812

 

Prepaid license fee

 

 

(19,446 )

 

 

(17,500 )

Accrued interest

 

 

204,830

 

 

 

150,008

 

Accrued compensation

 

 

461,650

 

 

 

576,045

 

Net cash used in operating activities

 

 

(367,549 )

 

 

(452,740 )

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from promissory notes payable

 

 

335,000

 

 

 

150,000

 

Repayment of convertible notes payable

 

 

(97,392 )

 

 

-

 

Proceeds from convertible notes payable

 

 

133,000

 

 

 

140,000

 

Repayment of promissory notes payable

 

 

(83,849 )

 

 

-

 

Advances from officers

 

 

79,055

 

 

 

72,500

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

365,814

 

 

 

362,500

 

 

 

 

 

 

 

 

 

 

Net decrease in cash

 

 

(1,735 )

 

 

(90,240 )

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

9,982

 

 

 

136,990

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$8,247

 

 

$46,750

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$8,531

 

 

$-

 

Cash paid for income taxes

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Issuance of common stock for conversion of notes payable and accrued interest

 

$590,814

 

 

$290,464

 

Commitment shares issued for financing

 

 

-

 

 

 

14,000

 

Warrants on extinguishment of debt

 

$-

 

 

$186,972

 

 

See Notes to Unaudited Consolidated Financial Statements.

 

 
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Table of Contents

  

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

NOTE 1: ORGANIZATION, GOING CONCERN AND BASIS OF PRESENTATION

 

Visium Technologies, Inc. is focused on professional technology services, digital risk management, and cybersecurity for network physical security, the Cloud, mobility solutions, critical infrastructure security, and the Internet of Things (“IOT”).

 

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

 

Recent Developments

 

The Company is entering the West Africa data center construction market after it landed a contract in November, 2023 valued at over $20 million from its partner, Cybastion Institute of Technology, to oversee the design and construction of data centers in the Republic of Côte d’Ivoire and the Republic of Benin.  Visium is tasked with creating data centers that meet specific requirements and standards, ensuring optimal performance and reliability. The scope of work includes data center architecture and design, power controls and distribution systems, rack layouts, network topology, vendor high availability, and a comprehensive security stack which will includes Visium’s proprietary TruContextTM cybersecurity platform. As of March 31, 2024 no activity has occurred pursuant to this contract.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis. For the nine months ended March 31, 2024 we had a net loss of $2,275,069, had net cash used in operating activities of $367,549 and had negative working capital of $4,909,651. 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, 2023, contained in the Company’s Annual Report on Form 10-K filed with the SEC on October 6, 2023. The results of operations for the nine months ended March 31, 2024, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending June 30, 2024.

 

 
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Table of Contents

 

 VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Fiscal Year

 

The fiscal year ends on June 30. References to fiscal year 2024, for example, refer to the fiscal year ending June 30, 2024.

 

Principles of Consolidation

 

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

 

Use of Estimates

 

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

 

Cash and Cash Equivalents

 

The Company considers all highly liquid, temporary, cash equivalents or investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents during the nine months ended March 31, 2024 and year ended June 30, 2023.

 

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. As of March 31, 2024 and June 30, 2023, the Company did not exceed these FDIC limits.

 

Derivative Liabilities

 

The Company assessed the classification of its derivative financial instruments as of March 31, 2024 and June 30, 2023 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. The Company recorded derivative liabilities as of March 31, 2024 of $23,211.

 

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.

 

 
10

Table of Contents

 

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

 

Level 1:

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

 

 

Level 2:

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

 

 

Level 3:

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

 

Additional Disclosures Regarding Fair Value Measurements

 

The carrying value of cash, accounts payable and accrued expenses, accrued compensation, notes payable and convertible promissory notes payable, approximate their fair value due to the short maturity of these items or the use of market interest rates.

 

Convertible Instruments

 

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

 

ASC 815-40, Contracts in Entity’s own Equity, generally provides that, among other things, if an event is not within the entity’s control, such contract could require net cash settlement and shall be classified as an asset or a liability.

 

The Company determines whether the instruments issued in the transactions are considered indexed to the Company’s own stock. During fiscal years 2014 through 2023 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, 2024

 

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, 2024, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2023 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 professional services, data analytics, and cybersecurity.

 

 
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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU 2020-06, 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 in 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.

 

All other newly issued accounting pronouncements but not yet effective have been deemed immaterial or nonapplicable.

 

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,

 

 

June 30,

 

 

 

2024

 

 

2023

 

Weighted average common shares outstanding

 

 

74,327,012

 

 

 

6,306,120

 

Effect of dilutive securities-when applicable:

 

 

 

 

 

 

 

 

Convertible promissory notes

 

 

74,285,854

 

 

 

38,998,249

 

Preferred stock

 

 

11,348

 

 

 

11,348

 

Common stock options

 

 

2,222

 

 

 

2,222

 

Warrants

 

 

5,114,576

 

 

 

5,115,207

 

Fully diluted earnings per share—adjusted weighted-average shares and assumed conversions

 

 

153,741,012

 

 

 

50,433,146

 

 

NOTE 3: PREPAID LICENSE FEE

 

In April 2022, the Company entered into two-year software license agreement to enable product development. The license fee is prepaid  at a rate of $77,850 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, 2024, the prepaid license fee was $19,446.

 

 
13

Table of Contents

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

NOTE 4: DERIVATIVE LIABILITIES

 

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 embedded derivative liabilities. The Company’s derivative liabilities related to its convertible notes payable have been measured at fair value at March 31, 2024 and June 30, 2023 using the Cox, Ross & Rubinstein Binomial Tree valuation model.

 

The revaluation of the warrants and convertible debt at each reporting period, as well as the charges associated with issuing additional convertible notes, and warrants with price protection features, resulted in the recognition of a gain of $57,496 and a loss of $84,246 for the nine months March 31, 2024 and 2023, respectively in the Company’s consolidated statements of operations, under the caption “Gain (loss) in change of fair value of derivative liability”. The fair value of the warrants at March 31, 2024 and June 30, 2023 was $0 and $0, respectively. The fair value of the derivative liability related to the convertible debt at March 31, 2024 and June 30, 2023 is $23,211 and $80,707, respectively, which is reported on the consolidated balance sheet under the caption “Derivative liability”.

 

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

 

 

 

Nine Months Ended March 31,

 

 

 

2024

 

 

2023

 

Effective exercise price

 

$0.0026

 

 

$

0.107 – $0.139

 

Effective market price

 

$0.0039

 

 

$0.1945

 

Expected volatility

 

 

156.53%

 

 

303.3%

Risk-free interest

 

 

5.48%

 

 

4.79%

Expected terms

 

60  days

 

 

60-193 days

 

Expected dividend rate

 

 

0%

 

 

0%

 

Changes in the derivative liabilities during the nine months ended March 31, 2024 is follows:

 

Derivative liabilities at June 30, 2023

 

$80,707

 

Derivative liability expense

 

 

-

 

Gain on change in fair value of derivative liabilities

 

 

(57,496 )

Derivative liabilities at March 31, 2024

 

$23,211

 

 

 
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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

NOTE 5: ACCRUED INTEREST PAYABLE

 

Changes in accrued interest payable during the nine months ended March 31, 2024 is as follows:

 

Accrued interest payable at June 30, 2023

 

$548,041

 

Conversion of accrued interest into common stock

 

 

(240,257 )

Interest expense paid in cash

 

 

(8,531 )

Interest expense accrued for the nine months ended March 31, 2024

 

 

213,361

 

Accrued interest payable at March 31, 2024

 

$512,621

 

 

NOTE 6: CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

 

Convertible Notes Payable

 

At March 31, 2024 and June 30, 2023 convertible debentures consisted of the following:

 

 

 

March 31,

 

 

June 30,

 

 

 

2024

 

 

2023

 

Convertible notes payable

 

$686,908

 

 

$937,576

 

Discount on convertible notes

 

 

(10,984 )

 

 

-

 

Convertible notes, net

 

$675,924

 

 

$937,576

 

 

The Company had convertible promissory notes aggregating $675,924 and $937,576 at March 31, 2024 and June 30, 2023, respectively. The related accrued interest amounted to approximately $243,137 and $324,031 at March 31, 2024 and June 30, 2023, 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 $0.0042 to $22,500 per share, as a result of the two reverse stock splits. At March 31, 2024, approximately $634,000 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 are summarized below:

 

Convertible notes payable at June 30, 2023

 

$937,576

 

Convertible notes issued during the nine months ended March 31, 2024

 

 

133,000

 

Convertible notes repaid in cash

 

 

(76,250 )

Short term loan amended to be convertible note payable

 

 

10,000

 

Discount related to convertible notes payable

 

 

(10,984 )

Conversion of convertible notes payable into common stock

 

 

(331,317 )

Convertible notes payable at March 31, 2024

 

$675,924

 

 

For the nine months ended March 31, 2024, the following summarizes the conversion of debt for common shares:

 

 

 

 

 

Amount of

 

 

 Amount of

 

 

 

 

 

 

Conversion

 

 

 

Shares

 

 

Converted

 

 

 Converted

 

 

Conversion

 

 

 

 

Price

 

Name

 

Issued

 

 

Principal

 

 

Interest

 

 

Expense

 

 

Total

 

 

Per Share

 

Talos Victory Fund

 

 

778,500

 

 

$7,474

 

 

$3,826

 

 

$1,750

 

 

$13,050

 

 

$0.0168

 

FirstFire

 

 

6,000,000

 

 

 

118,200

 

 

 

-

 

 

 

-

 

 

 

118,200

 

 

 

0.0118

 

Mast Hill

 

 

17,467,930

 

 

 

140,743

 

 

 

234,025

 

 

 

17,500

 

 

 

392,269

 

 

 

0.0169

 

Morris Johnson

 

 

500,000

 

 

 

10,000

 

 

 

400

 

 

 

-

 

 

 

10,400

 

 

 

0.0208

 

1800 Diagonal

 

 

12,616,941

 

 

 

54,900

 

 

 

1,995

 

 

 

-

 

 

 

56,895

 

 

 

0.0045

 

Total

 

 

47,163,371

 

 

$331,317

 

 

$240,257

 

 

$19,250

 

 

$590,814

 

 

$0.0125

 

 

The Company repaid a convertible note in cash in September 2023 and again in March 2024. The repayment terms included a premium provision, resulting in a loss on the extinguishment of this debt of $21,141.

 

A recap of the Gain on extinguishment of debt follows:

 

Loss on extinguishment of debt related to payoff of convertible notes

 

$

(21,141

Total

 

$

(21,141

 

In February 2022, the Company entered into a Securities Purchase Agreements with three investors pursuant to which each investor purchased a promissory note, The Notes are convertible into shares of the Company’s common stock at a conversion price of $2.43 per share, subject to adjustment as provided therein.

 

 
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These notes had price protection provisions that allow for the reduction in the current conversion price upon the occurrence of certain events, including the Company’s issuance of common stock or securities convertible into or exercisable for common stock, such as options and warrants, at a price per share less than the conversion price then in effect. For instance, if the Company issues shares of its common stock or options exercisable for or securities convertible into common stock at an effective price per share of common stock less than the exercise price then in effect, the conversion price will be reduced to the effective price of the new issuance.

 

Due to the price protection features of these convertible notes, the difference between the amount of the fair value of the current conversion price and reduced conversion price calculated using the outstanding principal balances of the notes affected at the time of the conversion at the lower conversion price amounted to a total of $630,130 and is recorded as a deemed dividend with a corresponding increase and decrease in additional paid in capital as of March 31, 2024. Additionally, for the nine months ended March 31, 2024, it is reflected as a reduction to the net loss for the year to arrive at the net loss attributable to common shareholders to recognize the effect of the price protection provisions.

 

Notes Payable

 

The Company had promissory notes aggregating $650,603 and $380,013 at March 31, 2024 and June 30, 2023, respectively. The related accrued interest amounted to approximately $269,484 and $224,010 at March 31, 2024 and June 30, 2023, respectively. The notes payable bear interest at rates ranging from 0% to 16% per annum and are payable monthly.

 

Promissory notes totaling $355,000 have matured as of March 31, 2024.

 

NOTE 7: STOCKHOLDERS’ DEFICIT

 

Common Stock

 

At March 31, 2024, the Company had 1,000,000,000 authorized common shares.

 

At March 31, 2024, the Company has 126,480,567 common shares issued of which 126,472,250 were outstanding, which is net of approximately 8,309 unvested shares issued for the restricted stock awards granted during the year.

 

Issuances of Common Stock During the Nine Months Ended March 31, 2024

 

Convertible Notes Payable

During the nine months ended March 31, 2024 the Company issued 47,163,371 shares of its common stock related to the conversion of $590,814 of principal and accrued interest, at an average conversion price of $0.0125 per share.

 

Stock Based Compensation

During the nine months ended March 31, 2024 the Company issued 30,960,000 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $520,624, or $0.0168 per share, based on the share price at the time of the transactions. The shares vested during the period were issued at different dates, hence, different quoted prices. The grant-date quoted price of the shares that vested for directors and officers ranged from $0.0054 to $0.0169.

 

During the nine months ended March 31, 2024 13,184,166 shares of its $0.0001 par value common stock vested to its consultants, as compensation under separate consulting agreements. The shares were valued at $417,887, or $0.03 per share. The shares vested during the period were issued at different dates, hence different quoted prices. The grant-date quoted price of the shares that vested for consultants ranged from $0.0168 to $0.3100. Consultants were granted stock awards in January 2023, at a time when stock prices were trading $0.31, Some of these granted stocks were vested in Q2 2024. Directors, officers, and employees did not receive a stock award on the same date.

 

During the nine months ended March 31, 2024 the Company issued 5,320,000 shares of its $0.0001 par value common stock as compensation to its employees. The shares were valued at $89,407, or $0.0168 per share, based on the share price at the time of the transaction.

 

 
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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

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 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 C Convertible Preferred Stock

 

Thirty thousand (30,000) shares of preferred stock were designated as Series C Preferred stock in October 2023. This Series C Preferred Stock has a $0.001 par value, and each share is convertible into the Company’s common stock at a conversion price of $0.075 per share, with a stated value of $100 per share.  There were no Series C Convertible Preferred shares outstanding as of March 31, 2024.

 

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 CEO and CFO, is the holder of the one share of Series AA Convertible Preferred Stock.

 

Common Stock Warrants

 

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.  The Company recorded a loss of extinguishment of debt of $519,993. These warrants had price protection provisions that allow for the reduction in the current exercise price upon the occurrence of certain events, including the Company’s issuance of common stock or securities convertible into or exercisable for common stock, such as options and warrants, at a price per share less than the exercise price then in effect. For instance, if the Company issues shares of its common stock or options exercisable for or securities convertible into common stock at an effective price per share of common stock less than the exercise price then in effect, the exercise price will be reduced to the effective price of the new issuance. Simultaneously with any reduction to the exercise price, the number of shares of common stock that may be purchased upon exercise of each of these warrants shall be increased proportionately, so that after such adjustment the aggregate exercise price payable for the adjusted number of warrants shall be the same as the aggregate exercise price in effect immediately prior to such adjustment.

 

 
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Table of Contents

 

Due to the price protection features of these warrants, the Company issued 5,048,426 warrant shares to these warrant holders. The difference between the amount of the fair value of the current exercise price and reduced exercise price was treated as deemed dividend.

 

A summary of the status of the Company’s outstanding common stock warrants as of March 31, 2024 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

 

 

5,115,207

 

 

$0.025

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Forfeited

 

 

(631)

 

 

10.395

 

Balance at end of period

 

 

5,114,576

 

 

$0.023

 

 

 

 

 

 

 

 

 

 

Warrants exercisable at end of period

 

 

5,114,576

 

 

$0.023

 

 

The following table summarizes information about common stock warrants outstanding at March 31, 2024:

 

 

 

 

Warrants Outstanding

 

 

Warrants Exercisable

 

Range of

Exercise Price

 

 

Number

Outstanding 

At March 31,

2024

 

 

Weighted

Average

Remaining

Contractual Life

 

Weighted

Average

Exercise

Price

 

 

Number

Exercisable 

At March 31,

2024

 

 

Weighted

Average

Exercise

Price

 

$0.0169

 

 

 

5,112,426

 

 

3.42 Years

 

$0.0169

 

 

 

5,112,426

 

 

$0.0169

 

$12.285

 

 

 

1,339

 

 

0.50 Years

 

$12.285

 

 

 

1,339

 

 

$12.285

 

$20.385

 

 

 

811

 

 

0.50 Years

 

$20.385

 

 

 

811

 

 

$20.385

 

 

 

 

 

 

5,114,576

 

 

3.42 Years

 

$0.023

 

 

 

5,114,576

 

 

$0.023

 

 

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 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, 2024 and 2023, 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, 2024 and 2023, 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, 2024, 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, 2024.

 

 
18

Table of Contents

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

Note 8 - STOCK-BASED COMPENSATION, continued

 

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,

 

 

 

2024

 

 

2023

 

Expected volatility

 

 

-

%

 

-

%

Expected term

 

 

-

 

 

 

-

 

Risk-free interest rate

 

 

-

%

 

-

%

Forfeiture Rate

 

 

-

%

 

-

%

Expected dividend yield

 

 

-

%

 

-

%

 

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, 2024 and June 30, 2023 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, 2023

 

 

2,222

 

 

$27.00

 

 

$-

 

 

$0

 

 

 

2.84

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forfeiture and cancelled

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

-

 

At March 31, 2024

 

 

2,222

 

 

$27.00

 

 

$-

 

 

$0

 

 

 

2.08

 

 

The following table summarizes information about employee stock options outstanding at March 31, 2024:

 

 

 

 

Outstanding Options

 

 

Vested Options

 

 

 

 

Number

 

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

Outstanding

 

 

Weighted

 

 

Weighted

 

 

Exercisable

 

 

Weighted

 

 

Weighted

 

 

 

 

at

 

 

Averaged

 

 

Averaged

 

 

at

 

 

Averaged

 

 

Averaged

 

 

 

 

March 31,

 

 

Remaining

 

 

Exercise

 

 

March 31,

 

 

Exercise

 

 

Remaining

 

Range of Exercise Price

 

 

2024

 

 

Life

 

 

Price

 

 

2024

 

 

Price

 

 

Life

 

$27.00

 

 

 

2,222

 

 

 

2.08

 

 

$27.00

 

 

 

2,222

 

 

$27.00

 

 

 

2.08

 

Outstanding options

 

 

 

2,222

 

 

 

2.08

 

 

$27.00

 

 

 

2,222

 

 

$27.00

 

 

 

2.08

 

 

As of March 31, 2024, the Company had approximately $0 of unrecognized pre-tax non-cash compensation expense.

 

 
19

Table of Contents

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

Note 8 - STOCK-BASED COMPENSATION, continued

 

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 or the vesting conditions of the award are not met. The holder of a vested 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, 2024 is presented in the following table: 

 

 

 

 

 

Weighted

 

 

 

 

 

Average

 

 

 

 

 

Grant Date

 

 

 

Shares

 

 

Fair Value

 

Unvested at June 30, 2023

 

 

7,297,475

 

 

$0.0536

 

Granted

 

 

42,425,000

 

 

$0.0169

 

Forfeited

 

 

(250,000 )

 

$0.3100

 

Vested

 

 

(49,464,166 )

 

$0.0207

 

Unvested at March 31, 2024

 

 

8,309

 

 

$0.1100

 

 

Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of March 31, 2024 was $917 and is expected to be recognized during April 2024. 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 $1,027,918 for the nine months ended March 31, 2024.

 

NOTE 9: RELATED PARTY TRANSACTIONS

 

Equity transactions with related parties are described in Note 7.

 

From time to time we have borrowed operating funds from Mr. Mark Lucky, our Chief Executive Officer and from certain Directors, for working capital. The advances were payable upon demand and were interest free. At March 31, 2024 there was $178,633 outstanding of such advances made to the Company.

 

NOTE 10 - ACCRUED COMPENSATION 

 

Accrued compensation consist of the following at:

 

 

 

March 31

 

 

June 30

 

 

 

2024

 

 

2023

 

Accrued compensation - officers

 

$1,082,762

 

 

$900,846

 

Accrued compensation - staff

 

 

750,767

 

 

 

471,033

 

 

 

$1,833,529

 

 

$1,371,879

 

 

 
20

Table of Contents

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

 

NOTE 11: COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

The Company operates virtually, with no office space rented. The Company has no future minimum annual payments under non-cancelable operating leases at March 31, 2024.

 

 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, 2024, and based on the assessment there are no probable loss contingencies requiring accrual or disclosures within its financial statements.

 

License Contingent Consideration

 

Our license agreements with The MITRE Corporation include provisions for a royalty payment on revenues collected of 6%. As of March 31, 2024, 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 12: SUBSEQUENT EVENTS

 

In April and May 2024 our consultants vested 11,558,333 shares of our $0.0001 par value common stock to eleven consultants as compensation, valued at $49,427, or an average price per share of $0.0043

 

In April 2024 the Company issued 30,000,000 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $126,000, or $0.0042 per share, based on the share price at the time of the transactions.

 

In April 2024 the Company issued 7,500,000 shares of its $0.0001 par value common stock as compensation to three of its employees. The shares were valued at $31,500, or $0.0042 per share, based on the share price at the time of the transactions.

 

In April and May 2024 the Company issued 12,687,917 shares of its $0.0001 par value common stock upon the conversion of principal interest, and fees of $53,289 of its outstanding promissory notes, valued at $0.0042 per share.

 

 
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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. (“Visium”) was incorporated in Nevada as Jaguar Investments, Inc. during October 1987. During March 2003, a wholly owned subsidiary of the Company merged with Freight Rate, Inc., a development stage company in the logistics software business. During May 2003, the Company changed its name to Power2Ship, Inc. During October 2006, the Company merged with a newly formed, wholly owned subsidiary, Fittipaldi Logistics, Inc., a Nevada corporation, with the Company surviving but its name changed to Fittipaldi Logistics, Inc. effective November 2006. During December 2007, the Company merged with a newly formed, wholly owned subsidiary, NuState Energy Holdings, Inc., a Nevada corporation, with the Company surviving but renamed NuState Energy Holdings, Inc. effective December 2007. In 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, automation, and IT infrastructure services. 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 cyber security, based on graph database technology. The development of the technology was sponsored by the US Army and is currently in use by the U.S. 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 TruContextTM. The commercialization efforts included adding functionality to the core technology to make it a native cloud application, adding multi-user and multi-tenant capability, enhancing the graphical user interface, (“GUI”) to make the application more intuitive to use, and adding enhanced dashboard and reporting capabilities. TruContextTM would typically be deployed by an enterprise and be used by the security analyst to intuitively understand the massive amount of data flowing through the network environment, giving the analyst actionable information in real-time to ensure that the network is protected from threats. The analyst will understand the relationships of the assets in the data center, the communication patterns, and cybersecurity exposures, in real-time.

 

TruContextTM provides visualization, advanced cyber monitoring intelligence, threat hunting, forensic and root cause analysis, data modeling, analytics, and automation to help reduce risk, simplify security, and deliver better security outcomes. Our mission is to help people see and understand data, empowering decision-makers to make more informed and more timely decisions. Our solutions put the power of data into the hands of everyday people, allowing a broad population of business users to engage with their data, ask questions, solve problems, and create value.

 

Our products dramatically reduce the complexity and expense associated with traditional business intelligence applications. Our software allows people to access information, perform analysis, and share results without assistance from technical specialists. By putting powerful analytical technology directly into the hands of people who make decisions with data, we accelerate the pace of informed and intelligent decision-making. Our TruContextTM platform enables our customers to reduce or streamline their siloed and layered security products, simplifying operations while providing a comprehensive solution. Our solution automates certain previously manual tasks, freeing up personnel to focus on their most important objectives.

 

TruContextTM can be deployed in a broad range of use cases such as cyber security threat intelligence and forensics, IT/OT critical infrastructure security, supply chain analytics, anti-fraud, law enforcement, compliance, and health care. For example, a breach of your network might go undetected for months, as was the case with the Solar Winds hack that occurred in 2019-2020. In that case the hackers went undetected for 14 months. A Solar Winds type breach may not be preventable, but with TruContextTM analyzing streaming network data in real-time, this hack would almost certainly have been identified and remediated very quickly by the affected enterprise.

 

TruContextTM is a highly effective tool for proactively and iteratively searching through networks to detect and isolate advanced threats that evade existing security solutions. Should a breach occur, TruContextTM can quickly perform forensics and root cause analysis, identifying when an incident occurred, how it occurred, and the downstream effects of the incident to the network.

 

One of the top challenges faced by Security practitioners is to keep up with the increase in new cyber attacks while investigating and remediating existing threats. Time is of the essence while investigating potential threats and determining the scope and root-cause of a potential reach.

 

 
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A shortage of resources and experienced personnel continues to limit the ability of companies to conduct thorough investigations. Root cause analysis and forensics are key to intelligently securing the network.

 

TruContextTM directly addresses these challenges by:

 

Providing real-time comprehensive visualized information on security events, that

 

 

·

allow the cyber warrior to immediately pinpoint the root cause of the breach; and

 

·

know with certainty the priority and required remediation.

 

The real-time ingestion of and visualization of massive amounts of data simplifies the cyber effort, allowing the cyber analyst to intuitively understand the security posture of the organization at a glance.

 

Using TruContextTM makes the cyber analyst significantly more productive by eliminating false positives and prioritizing threat events.

 

TruContextTM ingests cyber data from any source, making the data generated by other cyber tools easily understood and actionable. TruContextTM gives the security analyst the ability to combine, layer, filter, and query data with a no-code user interface in a way that no other analytics platform can do.

 

There are many sophisticated and powerful cybersecurity tools currently available, but they all lack one thing – providing a comprehensive contextualized understanding of the data. Analysts have too many tools that do not communicate, creating silos of data/information. TruContextTM brings all the information for a comprehensive visualization.

 

Our information technology consulting services division was launched in September 2023 to provide network engineering, system engineering, converged infrastructure deployment, software development, and cybersecurity services.

 

Visium currently plans to generate revenue in three (3) primary ways:

 

 

·

through a virtual appliance model, primarily targeted to the Federal government, charging an annual seat license, with the seat license fee increasing based on the size of the network environment ;

 

·

through a SaaS model, charging a recurring monthly license fee for TruContextTM based on the size of the network environment and the number of TruContextTM Identifiers (nodes); and

 

·

through professional services to support and deliver project management, engineering, cybersecurity solutions and services to its customers, typically billed on an hourly basis, and delivered through a service contract.

 

Partnership Ecosystem

 

We work with a number of technology alliance partners to design go-to-market strategies that combine our platform with products or services provided by our technology alliance partners. These partner integrations deliver more secure solutions and an improved end user experience to their customers. Our technology alliance partnerships focus on security analytics, network and infrastructure security, threat platforms and orchestration, and automation.

 

Visium heavily relies 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.

 

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 Dynatrace. 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 Okta and Tableau.

 

Employees

 

As of March 31, 2024, we had six (6) full time employees.

 

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, 2024 and 2023

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

$399,604

 

 

$567,979

 

 

$1,990,912

 

 

$1,461,560

 

Development expense

 

 

19,447

 

 

 

73,755

 

 

 

67,256

 

 

 

175,707

 

Total Operating Expenses

 

 

419,051

 

 

 

641,734

 

 

 

2,058,168

 

 

 

1,637,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(419,051 )

 

 

(641,734 )

 

 

(2,058,168 )

 

 

(1,637,267 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on change in fair value of derivative liabilities

 

 

24,807

 

 

 

(50,384 )

 

 

57,496

 

 

 

(84,246 )

Derivative liability expense

 

 

-

 

 

 

(4,634 )

 

 

-

 

 

 

(62,773 )

Gain (loss) on extinguishment of debt

 

 

(9,106 )

 

 

(15,068 )

 

 

(21,141 )

 

 

(519,993 )

Interest expense

 

 

(74,712 )

 

 

(20,265 )

 

 

(253,256 )

 

 

(187,205 )

Total other income (expenses)

 

 

(59,011 )

 

 

(90,354 )

 

 

(216,901 )

 

 

(854,217 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(478,062 )

 

$(732,085 )

 

$(2,275,069 )

 

$(2,491,484 )

 

Selling, General, and Administrative Expenses

 

Nine Month Period Ended March 31, 2024

 

For the nine months ended March 31, 2024, selling, general and administrative expenses were $1,990,912 as compared to $1,461,560 for the nine months ended March 31, 2023. For the nine-month periods ended March 31, 2024 and 2023 selling, general and administrative expenses consisted of the following:

 

 

 

Nine Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Accounting expense

 

$63,840

 

 

$45,450

 

Consulting fees

 

 

135,000

 

 

 

35,020

 

Salaries

 

 

684,056

 

 

 

772,858

 

Legal and professional fees

 

 

41,844

 

 

 

30,652

 

Travel expense

 

 

6,616

 

 

 

249

 

Occupancy expense

 

 

1,606

 

 

 

1,498

 

Telephone expense

 

 

3,907

 

 

 

3,395

 

Marketing expense

 

 

550

 

 

 

1,066

 

Website expense

 

 

44

 

 

 

61

 

Investor relations expense

 

 

-

 

 

 

13,688

 

Stock based consulting expense

 

 

418,285

 

 

 

36,989

 

Stock based compensation expense

 

 

610,032

 

 

 

505,159

 

Other

 

 

25,133

 

 

 

15,525

 

 

 

$1,990,912

 

 

$1,461,560

 

 

The increase in selling, general and administrative expenses of $529,302 during fiscal 2024, when compared with the prior year, is primarily due to an increase in stock-based consulting expense of $381,296, an increase in stock-based compensation expense of $104,873, higher consulting expense of $99,980, higher legal and professional fees expense of $11,192, and higher accounting expense of $18,390, offset by lower salaries expense of $88,802.

 

We believe that our selling, general, and administrative expenses will be lower over the rest of the current fiscal year, driven by decreased stock-based compensation expense, offset by an increase in expenses related to greater business activity over the remainder of fiscal 2024.

 

 
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Development Expense

 

 

 

Nine-Months Ended

 

 

 

 

 

March 31,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Development expense

 

$67,256

 

 

$175,707

 

 

(36%)

 

 

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 2024.

 

Change in Fair Value of Derivative Liabilities 

 

 

Nine-Months Ended

 

 

 

 

 

March 31,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Gain (loss) on change in fair value of derivative liabilities

 

$57,496

 

 

$(84,246 )

 

(168%)

 

 

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,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Derivative liability expense

 

$-

 

 

$(62,773 )

 

(100%)

 

 

The Company issued convertible notes in October 2022 which 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,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Interest expense

 

$253,256

 

 

$187,205

 

 

 

35%

 

Interest expense represents stated interest of notes and convertible notes payable as well as amortization of debt discount. Interest expense is higher for the nine months ended March 31, 2024 due to higher note balances, offset by lower debt discount amortization of $75,060 as compared to the prior year period.

 

Loss on extinguishment of debt 

 

 

Nine-Months Ended

 

 

 

 

 

 

March 31,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Loss on extinguishment of debt

 

$(21,141 )

 

$(519,993 )

 

 

95.9%

 

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

 

$519,993

 

 

 
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Three Month Period Ended March 31, 2024

 

For the three months ended March 31, 2024, selling, general and administrative expenses were $399,604 as compared to $567,979 for the three months ended March 31, 2023. For the three months ended March 31, 2024 and 2023 selling, general and administrative expenses consisted of the following:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Accounting expense

 

$16,130

 

 

$20,093

 

Consulting fees

 

 

30,000

 

 

 

25,020

 

Salaries

 

 

224,867

 

 

 

237,578

 

Legal and professional fees

 

 

10,500

 

 

 

14,752

 

Travel expense

 

 

(2 )

 

 

-

 

Occupancy expense

 

 

506

 

 

 

442

 

Telephone expense

 

 

1,221

 

 

 

1,245

 

Marketing expense

 

 

-

 

 

 

774

 

Website expense

 

 

44

 

 

 

21

 

Investor relations expense

 

 

-

 

 

 

13,400

 

Stock based consulting expense

 

 

112,190

 

 

 

18,083

 

Stock based compensation expense

 

 

-

 

 

 

232,500

 

Other

 

 

4,148

 

 

 

4,121

 

 

 

$399,604

 

 

$567,979

 

 

The decrease in selling, general and administrative expenses of $168,425 for the three months ended March 31, 2024, when compared with the prior year period, is primarily due to a decrease in stock-based compensation expense of $232,500, a decrease in investor relations expense of $13,400, and a decrease in salaries, offset by an increase in stock-based consulting expense of $94,107, and an increase in consulting fees of $4,980.

 

Development Expense

 

 

 

Three-Months Ended

 

 

 

 

 

March 31,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Development expense

 

$19,446

 

 

$73,755

 

 

(73.6%)

 

 

Change in Fair Value of Derivative Liabilities

 

 

 

Three-Months Ended

 

 

 

 

 

March 31,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Gain (loss) on change in fair value of derivative liabilities

 

$24,807

 

 

$(50,384 )

 

 

149%

 

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

 

 

 

Three-Months Ended

 

 

 

 

 

March 31,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Derivative liability expense

 

$-

 

 

$(62,773 )

 

(100%)

 

 

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

 

Loss on extinguishment of debt

 

Three-Months Ended

 

 

 

 

 

 

March 31,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Loss on extinguishment of debt

 

$(9,106 )

 

$-

 

 

 

100%

 

 
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Interest Expense

 

 

 

Three-Months Ended

 

 

 

 

 

 

March 31,

 

 

%

 

 

 

2024

 

 

2023

 

 

Change

 

Interest expense

 

$74,712

 

 

$20,265

 

 

 

268.6%

 

Interest expense represents stated interest of notes and convertible notes payable as well as amortization of debt discount. Interest expense is higher for the three months ended March 31, 2024 due to higher principal balances and higher debt discount amortization as compared to the prior year period.

 

Liquidity and Capital Resources

 

 

 

Balance at

 

 

 

March 31,

 

 

June 30,

 

 

 

2024

 

 

2023

 

Cash

 

$8,247

 

 

$9,982

 

Accounts payable and accrued expenses

 

 

(1,062,823 )

 

 

(845,502 )

Accrued compensation

 

 

(1,833,529 )

 

 

(1,371,879 )

Notes, convertible notes, and accrued interest payable

 

$(1,839,148 )

 

$(1,865,630 )

 

 We do not have any material commitments for capital expenditures.

 

The objective of liquidity management is to ensure that we have ready access to sufficient funds to meet commitments and effectively implement our growth strategy. Our primary sources are financing activities such as the issuance of notes payable and convertible notes payable. In the past, we have mostly relied on debt and equity financing to provide for our operating needs.

 

We cannot ascertain that we have sufficient funds from operations to fund our ongoing operating requirements through June 30, 2024. We may need to raise funds to enhance our working capital and use these funds for strategic purposes. If such a 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 $367,549 and $452,740 during the nine-month periods ended March 31, 2024 and 2023, respectively, and has a working capital deficit of approximately $4.9 million and $4.3 million at March 31, 2024 and June 30, 2023, 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. 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.

 

 
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Nine months ended March 31, 2024

 

Net cash used in operations during the nine months ended March 31, 2024 decreased by approximately $66,003 or approximately 14.6% from the same period during fiscal year 2023. The cash used in operations was obtained through advances from directors totaling $79,055, the issuance of two convertible notes totaling $133,000, and the issuance of four promissory notes that netted the Company $335,000 during the nine months ended March 31, 2024.

 

Nine months ended March 31, 2023

 

Net cash used in operations during the nine months ended March 31, 2023 decreased by approximately $1,289,831 or 74% from the same period during fiscal year 2022. The decrease in cash used in operations is primarily due to the decrease in marketing and product development expenses, cash paid for legal and professional fees, and consulting and business development expense. This cash was obtained through the issuance of two convertible notes that netted the Company $140,000, the issuance of two promissory notes that netted the Company $150,000, and advances from Directors of the Company of $72,500 during the nine months ended March 31, 2023.

 

Capital Raising Transactions

 

Other outstanding obligations at March 31, 2024

 

Convertible Notes Payable

 

The Company had convertible promissory notes aggregating $675,924 outstanding at March 31, 2024. The accrued interest amounted to approximately $243,137 as of March 31, 2024. 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 $0.0042 and $22,500 per share, at the holders’ option. At March 31, 2024, spproximately $634,000 of the convertible promissory notes have matured and are in default.

 

Notes Payable

 

The Company had promissory notes aggregating $650,603 at March 31, 2024. The related accrued interest amounted to approximately $269,484 at March 31, 2024. The Notes Payable bear interest at rates ranging between 0% and 16% per annum. Interest is generally payable monthly. At March 31, 2024, $355,000 of the promissory notes have matured and are in default.

 

 
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Table of Contents

  

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable to a smaller reporting company.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2024. In making this assessment, our management used criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Over Financial Reporting – Guidance for Smaller Public Companies.

 

During our assessment of the design and the effectiveness of internal control over financial reporting as of March 31, 2024, management identified the following material weaknesses:

 

 

While we have processes in place, there are no formal written policies and procedures related to certain financial reporting processes;

 

 

 

 

There is no formal documentation in which management specified financial reporting objectives to enable the identification of risks, including fraud risks;

 

 

 

 

Our Board of Directors consisted of nine members; however, we lack the resources and personnel to implement proper segregation of duties or other risk mitigation systems.

 

A material weakness is “a significant deficiency, or a combination of significant deficiencies, which result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected by us in a timely manner.” A significant deficiency is a deficiency or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting.

 

We intend to gradually improve our internal control over financial reporting to the extent that we can allocate resources to such improvements. We intend to prioritize the design of our internal control over financial reporting starting with our control environment and risk assessments and ending with control activities, information and communication activities, and monitoring activities. Although we believe the time to adapt in the next year will help position us to provide improved internal control functions into the future, in the interim, these changes caused control deficiencies, which in the aggregate resulted in a material weakness. Due to the existence of these material weaknesses, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our internal control over financial reporting was not effective as of March 31, 2024.

 

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the SEC that permit smaller reporting companies to provide only the management’s report in this annual report.

 

Changes in Internal Control Over Financial Reporting

 

During the quarter ended March 31, 2024, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

At March 31, 2024 the Company is not the subject of, or party to, any pending or threatened, material legal actions.

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

Item 1A. Risk Factors.

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K filed on October 6, 2023, which could materially affect our business operations, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business operations and/or financial condition. There have been no material changes to our risk factors since the filing of our Form 10-K.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

Convertible Notes Payable

During the nine months ended March 31, 2024 the Company issued 24,246,430 shares of its common stock related to the conversion of $409,276 of principal and accrued interest, at an average conversion price of $0.0169 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, 2024 the Company issued 30,960,000 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $520,624, or $0.0168 per share, based on the share price at the time of the transactions.

 

During the nine months ended March 31, 2024 6,129,999 shares of its $0.0001 par value common stock vested to its consultants, as compensation under separate consulting agreements. The shares were valued at $306,100, or $0.05 per share.

 

During the nine months ended March 31, 2024 the Company issued 5,320,000 shares of its $0.0001 par value common stock as compensation to its employees. The shares were valued at $89,408, or $0.0168 per share, based on the share price at the time of the transaction.

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

Not applicable to our operations.

 

Item 5. Other Information.

 

None

 

 
31

Table of Contents

 

Item 6. Exhibits

 

31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

 

 

31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

 

 

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

 

 

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

 

*

Filed herewith.

 

 
32

Table of Contents

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

VISIUM TECHNOLOGIES, INC.

 

 

 

 

By:

/S/ Mark B. Lucky

May 15, 2024

 

Mark B. Lucky

 

 

CEO, principal executive officer

 

 

 

 

By:

/S/ Mark Lucky

May 15, 2024

 

Mark Lucky

 

 

CFO, principal accounting officer

 

 
33

  

nullnullnullnullv3.24.1.1.u2
Cover - shares
9 Months Ended
Mar. 31, 2024
May 15, 2024
Cover [Abstract]    
Entity Registrant Name VISIUM TECHNOLOGIES, INC.  
Entity Central Index Key 0001082733  
Document Type 10-Q  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Current Reporting Status Yes  
Document Period End Date Mar. 31, 2024  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Entity Common Stock Shares Outstanding   188,218,508
Entity File Number 000-25753  
Entity Incorporation State Country Code FL  
Entity Tax Identification Number 87-0449667  
Entity Address Address Line 1 4094 MAJESTIC LANE  
Entity Address Address Line 2 SUITE 360  
Entity Address City Or Town FAIRFAX  
Entity Address State Or Province VA  
Entity Address Postal Zip Code 22033  
City Area Code 703  
Local Phone Number 273-0383  
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current Yes  
v3.24.1.1.u2
CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2024
Jun. 30, 2023
Current assets:    
Cash $ 8,247 $ 9,982
Prepaid license fee 19,446 0
Total current assets 27,693 9,982
Total assets 27,693 9,982
Current liabilities:    
Accounts payable and accrued expenses 1,062,823 845,502
Accrued compensation 1,833,529 1,371,879
Due to officer 178,633 99,578
Accrued interest 512,621 548,041
Convertible notes payable, net of discount of $10,984 and $0 as of March 31, 2024 and June 30, 2023, respectively 675,924 937,576
Derivative liabilities 23,211 80,707
Notes payable, net of discount of $14,866 and $26,805 as of March 31, 2024 and June 30, 2023, respectively 650,603 380,013
Total current liabilities 4,937,344 4,263,296
Stockholders' deficit:    
Common stock, $0.0001 par value, 1,000,000,000 shares authorized: 126,480,567 shares issued and 126,472,258 outstanding at March 31, 2024, and 37,199,647 shares issued and 29,844,713 outstanding at June 30, 2023, respectively (See Note 7) 12,648 2,987
Additional paid in capital 57,836,980 55,597,779
Accumulated deficit (62,774,599) (59,869,400)
Total stockholders' deficit (4,909,651) (4,253,314)
Total liabilities and stockholders' deficit 27,693 9,982
Series A Convertible Preferred Stock [Member]    
Stockholders' deficit:    
Preferred Stock Value 13,992 13,992
Series B Convertible Preferred Stock [Member]    
Stockholders' deficit:    
Preferred Stock Value 1,328 1,328
Series C Convertible Preferred Stock [Member]    
Stockholders' deficit:    
Preferred Stock Value 0 0
Series AA Convertible Stock [Member]    
Stockholders' deficit:    
Preferred Stock Value $ 0 $ 0
v3.24.1.1.u2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
Mar. 31, 2024
Jun. 30, 2023
Convertible notes payable, net of discount $ 10,984 $ 0
Notes payable, net of discount $ 14,866 $ 26,805
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 126,480,567 37,199,647
Common stock, shares outstanding 126,472,250 29,844,713
Series A Convertible Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued 13,992,340 13,992,340
Preferred stock, shares outstanding 13,992,340 13,992,340
Series B Convertible Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 30,000,000 30,000,000
Preferred stock, shares issued 1,327,670 1,327,670
Preferred stock, shares outstanding 1,327,670 1,327,670
Series C Convertible Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 30,000 30,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Series AA Convertible Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 1 1
Preferred stock, shares issued 1 1
Preferred stock, shares outstanding 1 1
v3.24.1.1.u2
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)        
Net revenues $ 0 $ 0 $ 0 $ 0
Operating expenses:        
Selling, general and administrative 399,604 567,979 1,990,912 1,461,560
Development expense 19,447 73,755 67,256 175,707
Total Operating Expenses 419,051 641,734 2,058,168 1,637,267
Loss from Operations (419,051) (641,734) (2,058,168) (1,637,267)
Other income (expenses):        
Gain (loss) on change in fair value of derivative liabilities 24,807 (50,384) 57,496 (84,246)
Derivative liability expense 0 (4,634) 0 (62,773)
Loss on extinguishment of debt (9,106) (15,068) (21,141) (519,993)
Interest expense (74,712) (20,265) (253,256) (187,205)
Total other income (expenses) (59,011) (90,354) (216,901) (854,217)
Net loss (478,062) (732,085) (2,275,069) (2,491,484)
Common stock deemed dividend (145,670) 0 (630,130) 0
Net loss attributable to common stockholders $ (623,732) $ (732,085) $ (2,905,199) $ (2,491,484)
Loss per common share basic and diluted $ (0.01) $ (0.16) $ (0.04) $ (0.72)
Weighted average common shares outstanding - basic and diluted 108,132,383 4,658,570 74,327,012 3,454,032
v3.24.1.1.u2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT (Unaudited) - USD ($)
Total
Series A, Preferred Stock
Series B, Preferred Stock
Series C, Preferred Stock
Series AA Preferred Stock
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Balance, shares at Jun. 30, 2022   13,992,340 1,327,670   1 2,896,385    
Balance, amount at Jun. 30, 2022 $ (2,793,558) $ 13,992 $ 1,328   $ 0 $ 288 $ 53,749,386 $ (56,558,552)
Shares issued for consulting services, shares           69,815    
Shares issued for consulting services, amount 36,956         $ 7 36,949  
Shares issued as compensation to employees, shares           465,001    
Shares issued as compensation to employees, amount 144,150         $ 47 144,103  
Shares issued as compensation to directors and officers, shares           1,045,932    
Shares issued as compensation to directors and officers, amount 361,013         $ 105 360,908  
Warrants issued on extinguishment of debt 186,972           186,972  
Shares issued for conversion of notes payable and accrued interest, shares           976,100    
Shares issued for conversion of notes payable and accrued interest, amount 290,464         $ 98 290,366  
Commitment shares issued pursuant to financing, shares           66,668    
Commitment shares issued pursuant to financing, amount 14,000         $ 7 13,993  
Shares issued for exercise of warrants, shares           68,755    
Shares issued for exercise of warrants, amount 0         $ 7 (7)  
Net loss for the nine months ended March 31, 2023 (2,491,484)             (2,491,484)
Balance, shares at Mar. 31, 2023   13,992,340 1,327,670   1 5,588,656    
Balance, amount at Mar. 31, 2023 (4,251,487) $ 13,992 $ 1,328   $ 0 $ 559 54,782,670 (59,050,036)
Balance, shares at Dec. 31, 2022   13,992,340 1,327,670   1 3,986,103    
Balance, amount at Dec. 31, 2022 (3,997,400) $ 13,992 $ 1,328   $ 0 $ 398 54,304,833 (58,317,951)
Shares issued for consulting services, shares           58,333    
Shares issued for consulting services, amount 18,084         $ 6 18,078  
Shares issued as compensation to employees, shares           230,000    
Shares issued as compensation to employees, amount 71,300         $ 23 71,277  
Shares issued as compensation to directors and officers, shares           520,002    
Shares issued as compensation to directors and officers, amount 161,200         $ 52 161,148  
Commitment shares issued pursuant to financing, shares           66,668    
Commitment shares issued pursuant to financing, amount 14,000         $ 7 13,993  
Net loss for the nine months ended March 31, 2023 (732,085)             (732,085)
Shares issued for conversion of notes payable, shares           727,550    
Shares issued for conversion of notes payable, amount 213,418         $ 73 213,345  
Balance, shares at Mar. 31, 2023   13,992,340 1,327,670   1 5,588,656    
Balance, amount at Mar. 31, 2023 (4,251,487) $ 13,992 $ 1,328   $ 0 $ 559 54,782,670 (59,050,036)
Balance, shares at Jun. 30, 2023   13,992,340 1,327,670   1 29,844,713    
Balance, amount at Jun. 30, 2023 (4,253,314) $ 13,992 $ 1,328 $ 0 $ 0 $ 2,987 55,597,779 (59,869,400)
Shares issued for consulting services, shares           13,184,166    
Shares issued for consulting services, amount 417,887         $ 1,318 416,569  
Shares issued as compensation to employees, shares           5,320,000    
Shares issued as compensation to employees, amount 89,407         $ 532 88,875  
Shares issued as compensation to directors and officers, shares           30,960,000    
Shares issued as compensation to directors and officers, amount 520,624         $ 3,096 517,528  
Net loss for the nine months ended March 31, 2023 (2,275,069)             (2,275,069)
Shares issued for conversion of notes payable, shares           47,163,371    
Shares issued for conversion of notes payable, amount 590,814         $ 4,715 586,099  
Deemed dividend 0           630,130 630,130
Balance, shares at Mar. 31, 2024   13,992,340 1,327,670   1 126,472,250    
Balance, amount at Mar. 31, 2024 (4,909,651) $ 13,992 $ 1,328 0 $ 0 $ 12,648 57,836,980 (62,774,599)
Balance, shares at Dec. 31, 2023   13,992,340 1,327,670   1 96,501,142    
Balance, amount at Dec. 31, 2023 (4,724,913) $ 13,992 $ 1,328 0 $ 0 $ 9,652 57,400,982 (62,150,867)
Shares issued for consulting services, shares           7,054,167    
Shares issued for consulting services, amount 111,787         $ 705 111,082  
Net loss for the nine months ended March 31, 2023 (478,062)             (478,062)
Shares issued for conversion of notes payable, shares           22,916,941    
Shares issued for conversion of notes payable, amount 181,537         $ 2,291 179,246  
Deemed dividend 0           145,670 145,670
Balance, shares at Mar. 31, 2024   13,992,340 1,327,670   1 126,472,250    
Balance, amount at Mar. 31, 2024 $ (4,909,651) $ 13,992 $ 1,328 $ 0 $ 0 $ 12,648 $ 57,836,980 $ (62,774,599)
v3.24.1.1.u2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash flows from operating activities:    
Net loss $ (2,275,069) $ (2,491,484)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation 1,027,918 542,149
Amortization of debt discount 32,355 83,218
Derivative liability expense 0 62,773
(Gain) loss on change in fair value of derivative liability (57,496) 84,246
Loss on extinguishment of debt 21,141 519,993
Changes in operating assets and liabilities:    
Accounts payable and accrued expenses 236,568 37,812
Prepaid license fee (19,446) (17,500)
Accrued interest 204,830 150,008
Accrued compensation 461,650 576,045
Net cash used in operating activities (367,549) (452,740)
Cash flows from financing activities:    
Proceeds from promissory notes payable 335,000 150,000
Repayment of convertible notes payable (97,392) 0
Proceeds from convertible notes payable 133,000 140,000
Repayment of promissory notes payable (83,849) 0
Advances from officers 79,055 72,500
Net cash provided by financing activities 365,814 362,500
Net decrease in cash (1,735) (90,240)
Cash, beginning of period 9,982 136,990
Cash, end of period 8,247 46,750
Supplemental disclosures of cash flow information:    
Cash paid for interest 8,531 0
Cash paid for income taxes 0 0
Non-cash investing and financing activities:    
Issuance of common stock for conversion of notes payable and accrued interest 590,814 290,464
Commitment shares issued for financing 0 14,000
Warrants on extinguishment of debt $ 0 $ 186,972
v3.24.1.1.u2
ORGANIZATION GOING CONCERN AND BASIS OF PRESENTATION
9 Months Ended
Mar. 31, 2024
ORGANIZATION GOING CONCERN AND BASIS OF PRESENTATION  
ORGANIZATION, GOING CONCERN AND BASIS OF PRESENTATION

NOTE 1: ORGANIZATION, GOING CONCERN AND BASIS OF PRESENTATION

 

Visium Technologies, Inc. is focused on professional technology services, digital risk management, and cybersecurity for network physical security, the Cloud, mobility solutions, critical infrastructure security, and the Internet of Things (“IOT”).

 

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

 

Recent Developments

 

The Company is entering the West Africa data center construction market after it landed a contract in November, 2023 valued at over $20 million from its partner, Cybastion Institute of Technology, to oversee the design and construction of data centers in the Republic of Côte d’Ivoire and the Republic of Benin.  Visium is tasked with creating data centers that meet specific requirements and standards, ensuring optimal performance and reliability. The scope of work includes data center architecture and design, power controls and distribution systems, rack layouts, network topology, vendor high availability, and a comprehensive security stack which will includes Visium’s proprietary TruContextTM cybersecurity platform. As of March 31, 2024 no activity has occurred pursuant to this contract.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis. For the nine months ended March 31, 2024 we had a net loss of $2,275,069, had net cash used in operating activities of $367,549 and had negative working capital of $4,909,651. 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, 2023, contained in the Company’s Annual Report on Form 10-K filed with the SEC on October 6, 2023. The results of operations for the nine months ended March 31, 2024, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending June 30, 2024.

v3.24.1.1.u2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Mar. 31, 2024
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
Summary of Significant Accounting Policies

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Fiscal Year

 

The fiscal year ends on June 30. References to fiscal year 2024, for example, refer to the fiscal year ending June 30, 2024.

 

Principles of Consolidation

 

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

 

Use of Estimates

 

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

 

Cash and Cash Equivalents

 

The Company considers all highly liquid, temporary, cash equivalents or investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents during the nine months ended March 31, 2024 and year ended June 30, 2023.

 

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. As of March 31, 2024 and June 30, 2023, the Company did not exceed these FDIC limits.

 

Derivative Liabilities

 

The Company assessed the classification of its derivative financial instruments as of March 31, 2024 and June 30, 2023 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. The Company recorded derivative liabilities as of March 31, 2024 of $23,211.

 

Fair Value of Financial Instruments

 

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

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

 

Level 1:

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

 

 

Level 2:

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

 

 

Level 3:

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

 

Additional Disclosures Regarding Fair Value Measurements

 

The carrying value of cash, accounts payable and accrued expenses, accrued compensation, notes payable and convertible promissory notes payable, approximate their fair value due to the short maturity of these items or the use of market interest rates.

 

Convertible Instruments

 

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

 

ASC 815-40, Contracts in Entity’s own Equity, generally provides that, among other things, if an event is not within the entity’s control, such contract could require net cash settlement and shall be classified as an asset or a liability.

 

The Company determines whether the instruments issued in the transactions are considered indexed to the Company’s own stock. During fiscal years 2014 through 2023 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.

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, 2024, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2023 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 professional services, data analytics, and cybersecurity.

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU 2020-06, 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 in 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.

 

All other newly issued accounting pronouncements but not yet effective have been deemed immaterial or nonapplicable.

 

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,

 

 

June 30,

 

 

 

2024

 

 

2023

 

Weighted average common shares outstanding

 

 

74,327,012

 

 

 

6,306,120

 

Effect of dilutive securities-when applicable:

 

 

 

 

 

 

 

 

Convertible promissory notes

 

 

74,285,854

 

 

 

38,998,249

 

Preferred stock

 

 

11,348

 

 

 

11,348

 

Common stock options

 

 

2,222

 

 

 

2,222

 

Warrants

 

 

5,114,576

 

 

 

5,115,207

 

Fully diluted earnings per share—adjusted weighted-average shares and assumed conversions

 

 

153,741,012

 

 

 

50,433,146

 

v3.24.1.1.u2
PREPAID LICENSE FEE
9 Months Ended
Mar. 31, 2024
PREPAID LICENSE FEE  
Prepaid License Fee

NOTE 3: PREPAID LICENSE FEE

 

In April 2022, the Company entered into two-year software license agreement to enable product development. The license fee is prepaid  at a rate of $77,850 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, 2024, the prepaid license fee was $19,446.

v3.24.1.1.u2
DERIVATIVE LIABILITY
9 Months Ended
Mar. 31, 2024
DERIVATIVE LIABILITY  
DERIVATIVE LIABILITIES

NOTE 4: DERIVATIVE LIABILITIES

 

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 embedded derivative liabilities. The Company’s derivative liabilities related to its convertible notes payable have been measured at fair value at March 31, 2024 and June 30, 2023 using the Cox, Ross & Rubinstein Binomial Tree valuation model.

 

The revaluation of the warrants and convertible debt at each reporting period, as well as the charges associated with issuing additional convertible notes, and warrants with price protection features, resulted in the recognition of a gain of $57,496 and a loss of $84,246 for the nine months March 31, 2024 and 2023, respectively in the Company’s consolidated statements of operations, under the caption “Gain (loss) in change of fair value of derivative liability”. The fair value of the warrants at March 31, 2024 and June 30, 2023 was $0 and $0, respectively. The fair value of the derivative liability related to the convertible debt at March 31, 2024 and June 30, 2023 is $23,211 and $80,707, respectively, which is reported on the consolidated balance sheet under the caption “Derivative liability”.

 

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

 

 

 

Nine Months Ended March 31,

 

 

 

2024

 

 

2023

 

Effective exercise price

 

$0.0026

 

 

$

0.107 – $0.139

 

Effective market price

 

$0.0039

 

 

$0.1945

 

Expected volatility

 

 

156.53%

 

 

303.3%

Risk-free interest

 

 

5.48%

 

 

4.79%

Expected terms

 

60  days

 

 

60-193 days

 

Expected dividend rate

 

 

0%

 

 

0%

 

Changes in the derivative liabilities during the nine months ended March 31, 2024 is follows:

 

Derivative liabilities at June 30, 2023

 

$80,707

 

Derivative liability expense

 

 

-

 

Gain on change in fair value of derivative liabilities

 

 

(57,496 )

Derivative liabilities at March 31, 2024

 

$23,211

 

v3.24.1.1.u2
ACCRUED INTEREST PAYABLE
9 Months Ended
Mar. 31, 2024
ACCRUED INTEREST PAYABLE  
Accrued Interest Payable

NOTE 5: ACCRUED INTEREST PAYABLE

 

Changes in accrued interest payable during the nine months ended March 31, 2024 is as follows:

 

Accrued interest payable at June 30, 2023

 

$548,041

 

Conversion of accrued interest into common stock

 

 

(240,257 )

Interest expense paid in cash

 

 

(8,531 )

Interest expense accrued for the nine months ended March 31, 2024

 

 

213,361

 

Accrued interest payable at March 31, 2024

 

$512,621

 

v3.24.1.1.u2
CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
9 Months Ended
Mar. 31, 2024
CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE  
Convertible Notes Payable and Note Payable

NOTE 6: CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

 

Convertible Notes Payable

 

At March 31, 2024 and June 30, 2023 convertible debentures consisted of the following:

 

 

 

March 31,

 

 

June 30,

 

 

 

2024

 

 

2023

 

Convertible notes payable

 

$686,908

 

 

$937,576

 

Discount on convertible notes

 

 

(10,984 )

 

 

-

 

Convertible notes, net

 

$675,924

 

 

$937,576

 

 

The Company had convertible promissory notes aggregating $675,924 and $937,576 at March 31, 2024 and June 30, 2023, respectively. The related accrued interest amounted to approximately $243,137 and $324,031 at March 31, 2024 and June 30, 2023, 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 $0.0042 to $22,500 per share, as a result of the two reverse stock splits. At March 31, 2024, approximately $634,000 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 are summarized below:

 

Convertible notes payable at June 30, 2023

 

$937,576

 

Convertible notes issued during the nine months ended March 31, 2024

 

 

133,000

 

Convertible notes repaid in cash

 

 

(76,250 )

Short term loan amended to be convertible note payable

 

 

10,000

 

Discount related to convertible notes payable

 

 

(10,984 )

Conversion of convertible notes payable into common stock

 

 

(331,317 )

Convertible notes payable at March 31, 2024

 

$675,924

 

 

For the nine months ended March 31, 2024, the following summarizes the conversion of debt for common shares:

 

 

 

 

 

Amount of

 

 

 Amount of

 

 

 

 

 

 

Conversion

 

 

 

Shares

 

 

Converted

 

 

 Converted

 

 

Conversion

 

 

 

 

Price

 

Name

 

Issued

 

 

Principal

 

 

Interest

 

 

Expense

 

 

Total

 

 

Per Share

 

Talos Victory Fund

 

 

778,500

 

 

$7,474

 

 

$3,826

 

 

$1,750

 

 

$13,050

 

 

$0.0168

 

FirstFire

 

 

6,000,000

 

 

 

118,200

 

 

 

-

 

 

 

-

 

 

 

118,200

 

 

 

0.0118

 

Mast Hill

 

 

17,467,930

 

 

 

140,743

 

 

 

234,025

 

 

 

17,500

 

 

 

392,269

 

 

 

0.0169

 

Morris Johnson

 

 

500,000

 

 

 

10,000

 

 

 

400

 

 

 

-

 

 

 

10,400

 

 

 

0.0208

 

1800 Diagonal

 

 

12,616,941

 

 

 

54,900

 

 

 

1,995

 

 

 

-

 

 

 

56,895

 

 

 

0.0045

 

Total

 

 

47,163,371

 

 

$331,317

 

 

$240,257

 

 

$19,250

 

 

$590,814

 

 

$0.0125

 

 

The Company repaid a convertible note in cash in September 2023 and again in March 2024. The repayment terms included a premium provision, resulting in a loss on the extinguishment of this debt of $21,141.

 

A recap of the Gain on extinguishment of debt follows:

 

Loss on extinguishment of debt related to payoff of convertible notes

 

$

(21,141

Total

 

$

(21,141

 

In February 2022, the Company entered into a Securities Purchase Agreements with three investors pursuant to which each investor purchased a promissory note, The Notes are convertible into shares of the Company’s common stock at a conversion price of $2.43 per share, subject to adjustment as provided therein.

These notes had price protection provisions that allow for the reduction in the current conversion price upon the occurrence of certain events, including the Company’s issuance of common stock or securities convertible into or exercisable for common stock, such as options and warrants, at a price per share less than the conversion price then in effect. For instance, if the Company issues shares of its common stock or options exercisable for or securities convertible into common stock at an effective price per share of common stock less than the exercise price then in effect, the conversion price will be reduced to the effective price of the new issuance.

 

Due to the price protection features of these convertible notes, the difference between the amount of the fair value of the current conversion price and reduced conversion price calculated using the outstanding principal balances of the notes affected at the time of the conversion at the lower conversion price amounted to a total of $630,130 and is recorded as a deemed dividend with a corresponding increase and decrease in additional paid in capital as of March 31, 2024. Additionally, for the nine months ended March 31, 2024, it is reflected as a reduction to the net loss for the year to arrive at the net loss attributable to common shareholders to recognize the effect of the price protection provisions.

 

Notes Payable

 

The Company had promissory notes aggregating $650,603 and $380,013 at March 31, 2024 and June 30, 2023, respectively. The related accrued interest amounted to approximately $269,484 and $224,010 at March 31, 2024 and June 30, 2023, respectively. The notes payable bear interest at rates ranging from 0% to 16% per annum and are payable monthly.

 

Promissory notes totaling $355,000 have matured as of March 31, 2024.

v3.24.1.1.u2
STOCKHOLDERS DEFICIT
9 Months Ended
Mar. 31, 2024
STOCKHOLDERS DEFICIT  
Stockholders' Deficit

NOTE 7: STOCKHOLDERS’ DEFICIT

 

Common Stock

 

At March 31, 2024, the Company had 1,000,000,000 authorized common shares.

 

At March 31, 2024, the Company has 126,480,567 common shares issued of which 126,472,250 were outstanding, which is net of approximately 8,309 unvested shares issued for the restricted stock awards granted during the year.

 

Issuances of Common Stock During the Nine Months Ended March 31, 2024

 

Convertible Notes Payable

During the nine months ended March 31, 2024 the Company issued 47,163,371 shares of its common stock related to the conversion of $590,814 of principal and accrued interest, at an average conversion price of $0.0125 per share.

 

Stock Based Compensation

During the nine months ended March 31, 2024 the Company issued 30,960,000 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $520,624, or $0.0168 per share, based on the share price at the time of the transactions. The shares vested during the period were issued at different dates, hence, different quoted prices. The grant-date quoted price of the shares that vested for directors and officers ranged from $0.0054 to $0.0169.

 

During the nine months ended March 31, 2024 13,184,166 shares of its $0.0001 par value common stock vested to its consultants, as compensation under separate consulting agreements. The shares were valued at $417,887, or $0.03 per share. The shares vested during the period were issued at different dates, hence different quoted prices. The grant-date quoted price of the shares that vested for consultants ranged from $0.0168 to $0.3100. Consultants were granted stock awards in January 2023, at a time when stock prices were trading $0.31, Some of these granted stocks were vested in Q2 2024. Directors, officers, and employees did not receive a stock award on the same date.

 

During the nine months ended March 31, 2024 the Company issued 5,320,000 shares of its $0.0001 par value common stock as compensation to its employees. The shares were valued at $89,407, or $0.0168 per share, based on the share price at the time of the transaction.

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 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 C Convertible Preferred Stock

 

Thirty thousand (30,000) shares of preferred stock were designated as Series C Preferred stock in October 2023. This Series C Preferred Stock has a $0.001 par value, and each share is convertible into the Company’s common stock at a conversion price of $0.075 per share, with a stated value of $100 per share.  There were no Series C Convertible Preferred shares outstanding as of March 31, 2024.

 

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 CEO and CFO, is the holder of the one share of Series AA Convertible Preferred Stock.

 

Common Stock Warrants

 

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.  The Company recorded a loss of extinguishment of debt of $519,993. These warrants had price protection provisions that allow for the reduction in the current exercise price upon the occurrence of certain events, including the Company’s issuance of common stock or securities convertible into or exercisable for common stock, such as options and warrants, at a price per share less than the exercise price then in effect. For instance, if the Company issues shares of its common stock or options exercisable for or securities convertible into common stock at an effective price per share of common stock less than the exercise price then in effect, the exercise price will be reduced to the effective price of the new issuance. Simultaneously with any reduction to the exercise price, the number of shares of common stock that may be purchased upon exercise of each of these warrants shall be increased proportionately, so that after such adjustment the aggregate exercise price payable for the adjusted number of warrants shall be the same as the aggregate exercise price in effect immediately prior to such adjustment.

Due to the price protection features of these warrants, the Company issued 5,048,426 warrant shares to these warrant holders. The difference between the amount of the fair value of the current exercise price and reduced exercise price was treated as deemed dividend.

 

A summary of the status of the Company’s outstanding common stock warrants as of March 31, 2024 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

 

 

5,115,207

 

 

$0.025

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Forfeited

 

 

(631)

 

 

10.395

 

Balance at end of period

 

 

5,114,576

 

 

$0.023

 

 

 

 

 

 

 

 

 

 

Warrants exercisable at end of period

 

 

5,114,576

 

 

$0.023

 

 

The following table summarizes information about common stock warrants outstanding at March 31, 2024:

 

 

 

 

Warrants Outstanding

 

 

Warrants Exercisable

 

Range of

Exercise Price

 

 

Number

Outstanding 

At March 31,

2024

 

 

Weighted

Average

Remaining

Contractual Life

 

Weighted

Average

Exercise

Price

 

 

Number

Exercisable 

At March 31,

2024

 

 

Weighted

Average

Exercise

Price

 

$0.0169

 

 

 

5,112,426

 

 

3.42 Years

 

$0.0169

 

 

 

5,112,426

 

 

$0.0169

 

$12.285

 

 

 

1,339

 

 

0.50 Years

 

$12.285

 

 

 

1,339

 

 

$12.285

 

$20.385

 

 

 

811

 

 

0.50 Years

 

$20.385

 

 

 

811

 

 

$20.385

 

 

 

 

 

 

5,114,576

 

 

3.42 Years

 

$0.023

 

 

 

5,114,576

 

 

$0.023

 

v3.24.1.1.u2
STOCKBASED COMPENSATION
9 Months Ended
Mar. 31, 2024
STOCKBASED COMPENSATION  
Stock-Based Compensation

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 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, 2024 and 2023, 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, 2024 and 2023, 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, 2024, 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, 2024.

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,

 

 

 

2024

 

 

2023

 

Expected volatility

 

 

-

%

 

-

%

Expected term

 

 

-

 

 

 

-

 

Risk-free interest rate

 

 

-

%

 

-

%

Forfeiture Rate

 

 

-

%

 

-

%

Expected dividend yield

 

 

-

%

 

-

%

 

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, 2024 and June 30, 2023 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, 2023

 

 

2,222

 

 

$27.00

 

 

$-

 

 

$0

 

 

 

2.84

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forfeiture and cancelled

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

-

 

At March 31, 2024

 

 

2,222

 

 

$27.00

 

 

$-

 

 

$0

 

 

 

2.08

 

 

The following table summarizes information about employee stock options outstanding at March 31, 2024:

 

 

 

 

Outstanding Options

 

 

Vested Options

 

 

 

 

Number

 

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

Outstanding

 

 

Weighted

 

 

Weighted

 

 

Exercisable

 

 

Weighted

 

 

Weighted

 

 

 

 

at

 

 

Averaged

 

 

Averaged

 

 

at

 

 

Averaged

 

 

Averaged

 

 

 

 

March 31,

 

 

Remaining

 

 

Exercise

 

 

March 31,

 

 

Exercise

 

 

Remaining

 

Range of Exercise Price

 

 

2024

 

 

Life

 

 

Price

 

 

2024

 

 

Price

 

 

Life

 

$27.00

 

 

 

2,222

 

 

 

2.08

 

 

$27.00

 

 

 

2,222

 

 

$27.00

 

 

 

2.08

 

Outstanding options

 

 

 

2,222

 

 

 

2.08

 

 

$27.00

 

 

 

2,222

 

 

$27.00

 

 

 

2.08

 

 

As of March 31, 2024, 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 or the vesting conditions of the award are not met. The holder of a vested 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, 2024 is presented in the following table: 

 

 

 

 

 

Weighted

 

 

 

 

 

Average

 

 

 

 

 

Grant Date

 

 

 

Shares

 

 

Fair Value

 

Unvested at June 30, 2023

 

 

7,297,475

 

 

$0.0536

 

Granted

 

 

42,425,000

 

 

$0.0169

 

Forfeited

 

 

(250,000 )

 

$0.3100

 

Vested

 

 

(49,464,166 )

 

$0.0207

 

Unvested at March 31, 2024

 

 

8,309

 

 

$0.1100

 

 

Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of March 31, 2024 was $917 and is expected to be recognized during April 2024. 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 $1,027,918 for the nine months ended March 31, 2024.

v3.24.1.1.u2
RELATED PARTY TRANSACTIONS
9 Months Ended
Mar. 31, 2024
RELATED PARTY TRANSACTIONS  
Related Party Transactions

NOTE 9: RELATED PARTY TRANSACTIONS

 

Equity transactions with related parties are described in Note 7.

 

From time to time we have borrowed operating funds from Mr. Mark Lucky, our Chief Executive Officer and from certain Directors, for working capital. The advances were payable upon demand and were interest free. At March 31, 2024 there was $178,633 outstanding of such advances made to the Company.

v3.24.1.1.u2
ACCRUED COMPENSATION
9 Months Ended
Mar. 31, 2024
ACCRUED COMPENSATION  
Accrued payroll

NOTE 10 - ACCRUED COMPENSATION 

 

Accrued compensation consist of the following at:

 

 

 

March 31

 

 

June 30

 

 

 

2024

 

 

2023

 

Accrued compensation - officers

 

$1,082,762

 

 

$900,846

 

Accrued compensation - staff

 

 

750,767

 

 

 

471,033

 

 

 

$1,833,529

 

 

$1,371,879

 

v3.24.1.1.u2
COMMITMENTS AND CONTINGENCIES
9 Months Ended
Mar. 31, 2024
Commitments and contingencies (Note 11)  
Commitments and Contingencies

NOTE 11: COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

The Company operates virtually, with no office space rented. The Company has no future minimum annual payments under non-cancelable operating leases at March 31, 2024.

 

 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, 2024, and based on the assessment there are no probable loss contingencies requiring accrual or disclosures within its financial statements.

 

License Contingent Consideration

 

Our license agreements with The MITRE Corporation include provisions for a royalty payment on revenues collected of 6%. As of March 31, 2024, 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.

v3.24.1.1.u2
SUBSEQUENT EVENTS
9 Months Ended
Mar. 31, 2024
SUBSEQUENT EVENTS  
Subsequent Events

NOTE 12: SUBSEQUENT EVENTS

 

In April and May 2024 our consultants vested 11,558,333 shares of our $0.0001 par value common stock to eleven consultants as compensation, valued at $49,427, or an average price per share of $0.0043. 

 

In April 2024 the Company issued 30,000,000 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $126,000, or $0.0042 per share, based on the share price at the time of the transactions.

 

In April 2024 the Company issued 7,500,000 shares of its $0.0001 par value common stock as compensation to three of its employees. The shares were valued at $31,500, or $0.0042 per share, based on the share price at the time of the transactions.

 

In April and May 2024 the Company issued 12,687,917 shares of its $0.0001 par value common stock upon the conversion of principal interest, and fees of $53,289 of its outstanding promissory notes, valued at $0.0042 per share.

v3.24.1.1.u2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Mar. 31, 2024
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
Fiscal Year

The fiscal year ends on June 30. References to fiscal year 2024, for example, refer to the fiscal year ending June 30, 2024.

Principles of Consolidation

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

Use of Estimates

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

Cash and Cash Equivalents

The Company considers all highly liquid, temporary, cash equivalents or investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents during the nine months ended March 31, 2024 and year ended June 30, 2023.

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. As of March 31, 2024 and June 30, 2023, the Company did not exceed these FDIC limits.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of March 31, 2024 and June 30, 2023 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. The Company recorded derivative liabilities as of March 31, 2024 of $23,211.

Fair Value of Financial Instruments

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

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

 

Level 1:

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

 

 

Level 2:

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

 

 

Level 3:

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

 

Additional Disclosures Regarding Fair Value Measurements

 

The carrying value of cash, accounts payable and accrued expenses, accrued compensation, notes payable and convertible promissory notes payable, approximate their fair value due to the short maturity of these items or the use of market interest rates.

Convertible Instruments

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

 

ASC 815-40, Contracts in Entity’s own Equity, generally provides that, among other things, if an event is not within the entity’s control, such contract could require net cash settlement and shall be classified as an asset or a liability.

 

The Company determines whether the instruments issued in the transactions are considered indexed to the Company’s own stock. During fiscal years 2014 through 2023 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.

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, 2024, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2023 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 professional services, data analytics, and cybersecurity.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, 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 in 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.

 

All other newly issued accounting pronouncements but not yet effective have been deemed immaterial or nonapplicable.

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,

 

 

June 30,

 

 

 

2024

 

 

2023

 

Weighted average common shares outstanding

 

 

74,327,012

 

 

 

6,306,120

 

Effect of dilutive securities-when applicable:

 

 

 

 

 

 

 

 

Convertible promissory notes

 

 

74,285,854

 

 

 

38,998,249

 

Preferred stock

 

 

11,348

 

 

 

11,348

 

Common stock options

 

 

2,222

 

 

 

2,222

 

Warrants

 

 

5,114,576

 

 

 

5,115,207

 

Fully diluted earnings per share—adjusted weighted-average shares and assumed conversions

 

 

153,741,012

 

 

 

50,433,146

 

v3.24.1.1.u2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Mar. 31, 2024
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
Schedule of Potential dilutive common shares

 

 

March 31,

 

 

June 30,

 

 

 

2024

 

 

2023

 

Weighted average common shares outstanding

 

 

74,327,012

 

 

 

6,306,120

 

Effect of dilutive securities-when applicable:

 

 

 

 

 

 

 

 

Convertible promissory notes

 

 

74,285,854

 

 

 

38,998,249

 

Preferred stock

 

 

11,348

 

 

 

11,348

 

Common stock options

 

 

2,222

 

 

 

2,222

 

Warrants

 

 

5,114,576

 

 

 

5,115,207

 

Fully diluted earnings per share—adjusted weighted-average shares and assumed conversions

 

 

153,741,012

 

 

 

50,433,146

 

v3.24.1.1.u2
DERIVATIVE LIABILITIES (Tables)
9 Months Ended
Mar. 31, 2024
DERIVATIVE LIABILITY  
Derivative liabilities valuation assumptions

 

 

Nine Months Ended March 31,

 

 

 

2024

 

 

2023

 

Effective exercise price

 

$0.0026

 

 

$

0.107 – $0.139

 

Effective market price

 

$0.0039

 

 

$0.1945

 

Expected volatility

 

 

156.53%

 

 

303.3%

Risk-free interest

 

 

5.48%

 

 

4.79%

Expected terms

 

60  days

 

 

60-193 days

 

Expected dividend rate

 

 

0%

 

 

0%
Changes in the derivative liabilities

Derivative liabilities at June 30, 2023

 

$80,707

 

Derivative liability expense

 

 

-

 

Gain on change in fair value of derivative liabilities

 

 

(57,496 )

Derivative liabilities at March 31, 2024

 

$23,211

 

v3.24.1.1.u2
ACCRUED INTEREST PAYABLE (Tables)
9 Months Ended
Mar. 31, 2024
ACCRUED INTEREST PAYABLE  
Changes in accrued interest payable

Accrued interest payable at June 30, 2023

 

$548,041

 

Conversion of accrued interest into common stock

 

 

(240,257 )

Interest expense paid in cash

 

 

(8,531 )

Interest expense accrued for the nine months ended March 31, 2024

 

 

213,361

 

Accrued interest payable at March 31, 2024

 

$512,621

 

v3.24.1.1.u2
CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE (Tables)
9 Months Ended
Mar. 31, 2024
CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE  
Schdule of Convertible debentures

 

 

March 31,

 

 

June 30,

 

 

 

2024

 

 

2023

 

Convertible notes payable

 

$686,908

 

 

$937,576

 

Discount on convertible notes

 

 

(10,984 )

 

 

-

 

Convertible notes, net

 

$675,924

 

 

$937,576

 

Schedule of convertible notes payable

Convertible notes payable at June 30, 2023

 

$937,576

 

Convertible notes issued during the nine months ended March 31, 2024

 

 

133,000

 

Convertible notes repaid in cash

 

 

(76,250 )

Short term loan amended to be convertible note payable

 

 

10,000

 

Discount related to convertible notes payable

 

 

(10,984 )

Conversion of convertible notes payable into common stock

 

 

(331,317 )

Convertible notes payable at March 31, 2024

 

$675,924

 

Schdule of conversion of debt of common shares

 

 

 

 

Amount of

 

 

 Amount of

 

 

 

 

 

 

Conversion

 

 

 

Shares

 

 

Converted

 

 

 Converted

 

 

Conversion

 

 

 

 

Price

 

Name

 

Issued

 

 

Principal

 

 

Interest

 

 

Expense

 

 

Total

 

 

Per Share

 

Talos Victory Fund

 

 

778,500

 

 

$7,474

 

 

$3,826

 

 

$1,750

 

 

$13,050

 

 

$0.0168

 

FirstFire

 

 

6,000,000

 

 

 

118,200

 

 

 

-

 

 

 

-

 

 

 

118,200

 

 

 

0.0118

 

Mast Hill

 

 

17,467,930

 

 

 

140,743

 

 

 

234,025

 

 

 

17,500

 

 

 

392,269

 

 

 

0.0169

 

Morris Johnson

 

 

500,000

 

 

 

10,000

 

 

 

400

 

 

 

-

 

 

 

10,400

 

 

 

0.0208

 

1800 Diagonal

 

 

12,616,941

 

 

 

54,900

 

 

 

1,995

 

 

 

-

 

 

 

56,895

 

 

 

0.0045

 

Total

 

 

47,163,371

 

 

$331,317

 

 

$240,257

 

 

$19,250

 

 

$590,814

 

 

$0.0125

 

Schedule of Gain on extinguishment of debt

Loss on extinguishment of debt related to payoff of convertible notes

 

$

(21,141

Total

 

$

(21,141

v3.24.1.1.u2
STOCKHOLDERS DEFICIT (Tables)
9 Months Ended
Mar. 31, 2024
STOCKHOLDERS DEFICIT  
Common stock Warrant activity

 

 

Number of

 

 

Weighted Average

 

 

 

Warrants

 

 

Exercise Price

 

Common Stock Warrants

 

 

 

 

 

 

Balance at beginning of year

 

 

5,115,207

 

 

$0.025

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Forfeited

 

 

(631)

 

 

10.395

 

Balance at end of period

 

 

5,114,576

 

 

$0.023

 

 

 

 

 

 

 

 

 

 

Warrants exercisable at end of period

 

 

5,114,576

 

 

$0.023

 

Common Stock Warrant Outstanding

 

 

 

Warrants Outstanding

 

 

Warrants Exercisable

 

Range of

Exercise Price

 

 

Number

Outstanding 

At March 31,

2024

 

 

Weighted

Average

Remaining

Contractual Life

 

Weighted

Average

Exercise

Price

 

 

Number

Exercisable 

At March 31,

2024

 

 

Weighted

Average

Exercise

Price

 

$0.0169

 

 

 

5,112,426

 

 

3.42 Years

 

$0.0169

 

 

 

5,112,426

 

 

$0.0169

 

$12.285

 

 

 

1,339

 

 

0.50 Years

 

$12.285

 

 

 

1,339

 

 

$12.285

 

$20.385

 

 

 

811

 

 

0.50 Years

 

$20.385

 

 

 

811

 

 

$20.385

 

 

 

 

 

 

5,114,576

 

 

3.42 Years

 

$0.023

 

 

 

5,114,576

 

 

$0.023

 

v3.24.1.1.u2
STOCKBASED COMPENSATION (Tables)
9 Months Ended
Mar. 31, 2024
STOCKBASED COMPENSATION  
Valuation assumptions

 

 

Nine months ended March 31,

 

 

Year ended June 30,

 

 

 

2024

 

 

2023

 

Expected volatility

 

 

-

%

 

-

%

Expected term

 

 

-

 

 

 

-

 

Risk-free interest rate

 

 

-

%

 

-

%

Forfeiture Rate

 

 

-

%

 

-

%

Expected dividend yield

 

 

-

%

 

-

%

Schedule of stock options outstanding

 

 

 

 

 

Weighted Average

 

 

Grant Date

 

 

Aggregate

 

 

Weighted

Average

 

 

 

 

 

 

Exercise

 

 

Fair

 

 

Intrinsic

 

 

Remaining

 

 

 

Shares

 

 

Price

 

 

Value

 

 

Value

 

 

Term (Yrs)

 

Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At June 30, 2023

 

 

2,222

 

 

$27.00

 

 

$-

 

 

$0

 

 

 

2.84

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forfeiture and cancelled

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

-

 

At March 31, 2024

 

 

2,222

 

 

$27.00

 

 

$-

 

 

$0

 

 

 

2.08

 

Schedule of employee outstanding stock options

 

 

 

Outstanding Options

 

 

Vested Options

 

 

 

 

Number

 

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

Outstanding

 

 

Weighted

 

 

Weighted

 

 

Exercisable

 

 

Weighted

 

 

Weighted

 

 

 

 

at

 

 

Averaged

 

 

Averaged

 

 

at

 

 

Averaged

 

 

Averaged

 

 

 

 

March 31,

 

 

Remaining

 

 

Exercise

 

 

March 31,

 

 

Exercise

 

 

Remaining

 

Range of Exercise Price

 

 

2024

 

 

Life

 

 

Price

 

 

2024

 

 

Price

 

 

Life

 

$27.00

 

 

 

2,222

 

 

 

2.08

 

 

$27.00

 

 

 

2,222

 

 

$27.00

 

 

 

2.08

 

Outstanding options

 

 

 

2,222

 

 

 

2.08

 

 

$27.00

 

 

 

2,222

 

 

$27.00

 

 

 

2.08

 

Schedule of restricted stock activity

 

 

 

 

Weighted

 

 

 

 

 

Average

 

 

 

 

 

Grant Date

 

 

 

Shares

 

 

Fair Value

 

Unvested at June 30, 2023

 

 

7,297,475

 

 

$0.0536

 

Granted

 

 

42,425,000

 

 

$0.0169

 

Forfeited

 

 

(250,000 )

 

$0.3100

 

Vested

 

 

(49,464,166 )

 

$0.0207

 

Unvested at March 31, 2024

 

 

8,309

 

 

$0.1100

 

v3.24.1.1.u2
ACCRUED COMPENSATION (Tables)
9 Months Ended
Mar. 31, 2024
ACCRUED COMPENSATION  
Schedule of accrued payroll

 

 

March 31

 

 

June 30

 

 

 

2024

 

 

2023

 

Accrued compensation - officers

 

$1,082,762

 

 

$900,846

 

Accrued compensation - staff

 

 

750,767

 

 

 

471,033

 

 

 

$1,833,529

 

 

$1,371,879

 

v3.24.1.1.u2
ORGANIZATION DESCRIPTION OF BUSINESS AND GOING CONCERN (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
ORGANIZATION GOING CONCERN AND BASIS OF PRESENTATION        
Net loss $ (478,062) $ (732,085) $ (2,275,069) $ (2,491,484)
Net cash used in operating activities     (367,549) $ (452,740)
Working capital deficit $ 4,909,651   $ 4,909,651  
v3.24.1.1.u2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares
9 Months Ended 12 Months Ended
Mar. 31, 2024
Jun. 30, 2023
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    
Weighted average common shares outstanding 74,327,012 6,306,120
Effect of dilutive securities-when applicable: convertible promissory notes 74,285,854 38,998,249
Effect of dilutive securities-when applicable: Convertible preferred stock 11,348 11,348
Effect of dilutive securities-when applicable: Common stock options 2,222 2,222
Effect of dilutive securities-when applicable: Warrants 5,114,576 5,115,207
Fully diluted earnings per share-adjusted weighted-average shares and assumed conversions 153,741,012 50,433,146
v3.24.1.1.u2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
Apr. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Jun. 30, 2023
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES        
Derivative liability $ 23,211 $ 23,211 $ 48,018 $ 80,707
FDIC insured amount $ 250,000     $ 250,000
v3.24.1.1.u2
PREPAID LICENSE FEE (Details Narrative)
9 Months Ended
Mar. 31, 2024
USD ($)
PREPAID LICENSE FEE  
Annually Prepaid license fee $ 77,850
Prepaid license fee $ 19,446
v3.24.1.1.u2
DERIVATIVE LIABILITIES (Details) - $ / shares
9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Effective exercise price $ 0.0026  
Effective market price $ 0.0039 $ 0.1945
Expected volatility 156.53% 303.30%
Risk-free interest 5.48% 4.79%
Expected terms 60 days  
Expected dividend rate 0.00% 0.00%
Minimum [Member]    
Effective exercise price   $ 0.107
Expected terms 60 days  
Maximum [Member]    
Effective exercise price   $ 0.139
Expected terms 193 days  
v3.24.1.1.u2
DERIVATIVE LIABILITIES (Details 1)
9 Months Ended
Mar. 31, 2024
USD ($)
DERIVATIVE LIABILITY  
Derivative liabilities at June 30, 2023 Beginning $ 80,707
Derivative liability expense 0
Gain on change in fair value of derivative liabilities (57,496)
Derivative liabilities at March 31, 2024 $ 23,211
v3.24.1.1.u2
DERIVATIVE LIABILITIES (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Jun. 30, 2023
DERIVATIVE LIABILITY      
Recognition of a loss gain $ 57,496 $ 84,246  
fair value of warrants 0   $ 0
Fair value of derivative liability $ 23,211   $ 80,707
v3.24.1.1.u2
ACCRUED INTEREST PAYABLE (Details)
9 Months Ended
Mar. 31, 2024
USD ($)
ACCRUED INTEREST PAYABLE  
Accrued interest payable, beginning $ 548,041
Conversion of accrued interest into common stock (240,257)
Interest expense paid in cash (8,531)
Interest expense accrued for the nine months ended March 31, 2024 213,361
Accrued interest payable, Ending $ 512,621
v3.24.1.1.u2
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE (Details) - USD ($)
Mar. 31, 2024
Jun. 30, 2023
CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE    
Convertible notes payable $ 686,908 $ 937,576
Discount on convertible notes (10,984) 0
Convertible notes, net $ 675,924 $ 937,576
v3.24.1.1.u2
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE (Details 1)
9 Months Ended
Mar. 31, 2024
USD ($)
CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE  
Convertible notes payable $ 937,576
Convertible notes issued 133,000
Convertible notes repaid in cash (76,250)
Short term loan amended to be convertible note payable 10,000
Discount related to convertible notes payable (10,984)
Conversion of convertible notes payable into common stock (331,317)
Convertible notes payable, ending $ 675,924
v3.24.1.1.u2
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE (Details 2)
9 Months Ended
Mar. 31, 2024
USD ($)
$ / shares
shares
Convertible share issued | shares 47,163,371
Convertible notes payable, principle amount $ 331,317
Convertible notes payable, Interest amount 240,257
Convertible notes payable, Conversion expense $ 19,250
Convertible notes payable, Conversion price | $ / shares $ 0.0125
Total Debt conversion amount $ 590,814
Talos Victory Fund [Member]  
Convertible share issued | shares 778,500
Convertible notes payable, principle amount $ 7,474
Convertible notes payable, Interest amount 3,826
Convertible notes payable, Conversion expense $ 1,750
Convertible notes payable, Conversion price | $ / shares $ 0.0168
Total Talos Victory Fund $ 13,050
FirstFire [Member]  
Convertible share issued | shares 6,000,000
Convertible notes payable, principle amount $ 118,200
Convertible notes payable, Interest amount 0
Convertible notes payable, Conversion expense $ 0
Convertible notes payable, Conversion price | $ / shares $ 0.0118
Total FirstFire $ 118,200
Mast Hill [Member]  
Convertible share issued | shares 17,467,930
Convertible notes payable, principle amount $ 140,743
Convertible notes payable, Interest amount 234,025
Convertible notes payable, Conversion expense $ 17,500
Convertible notes payable, Conversion price | $ / shares $ 0.0169
Total Mast Hill $ 392,269
Morris Johnson [Member]  
Convertible share issued | shares 500,000
Convertible notes payable, principle amount $ 10,000
Convertible notes payable, Interest amount 400
Convertible notes payable, Conversion expense $ 0
Convertible notes payable, Conversion price | $ / shares $ 0.0208
Total Morris Johnson $ 10,400
1800 Diagonal [Member]  
Convertible share issued | shares 12,616,941
Convertible notes payable, principle amount $ 54,900
Convertible notes payable, Interest amount 1,995
Convertible notes payable, Conversion expense $ 0
Convertible notes payable, Conversion price | $ / shares $ 0.0045
Total Diagonal $ 56,895
v3.24.1.1.u2
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE (Details 3)
9 Months Ended
Mar. 31, 2024
USD ($)
shares
CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE  
Loss on extinguishment of debt related to payoff of convertible note | shares (21,141)
Total | $ $ (21,141)
v3.24.1.1.u2
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2024
Jun. 30, 2023
Loss on extinguishment of debt related to payoff of convertible note 21,141  
Common stock deemed dividends $ 630,130  
Convertible notes payable, Conversion price $ 2.43  
Convertible notes payable $ 675,924 $ 937,576
Minimum | Convertible Notes Payable [Member]    
Convertible debt instrument conversion price per share $ 0.0042  
Accrued interest $ 243,137 324,031
Debt instrument interest rate percentage 0.00%  
Maximum | Convertible Notes Payable [Member]    
Convertible debt instrument conversion price per share $ 22,500  
Debt instrument interest rate percentage 18.00%  
Promissory Notes [Member]    
Promissory notes $ 355,000  
Convertible notes payable 634,000  
Notes Payable | Minimum    
Accrued interest 269,484 224,010
Discount $ 650,603 $ 380,013
Debt instrument interest rate percentage 0.00%  
Notes Payable | Maximum    
Debt instrument interest rate percentage 16.00%  
v3.24.1.1.u2
STOCKHOLDERS DEFICIT (Details)
9 Months Ended
Mar. 31, 2024
$ / shares
shares
STOCKHOLDERS DEFICIT  
Number of warrants, Balance at beginning of year | shares 5,115,207
Granted | shares 0
Exercised | shares 0
Forfeited | shares (631)
Number of warrants, Balance at end of period | shares 5,114,576
Number of warrants, Warrants exercisable at end of period | shares 5,114,576
Weighted average exercise price, Balance at beginning of year | $ / shares $ 0.025
Weighted average exercise price, granted | $ / shares 0
Weighted average exercise price, exercised | $ / shares 0
Weighted average exercise price, forfeited | $ / shares 10.395
Weighted average exercise price, Balance at end of period | $ / shares 0.023
Weighted average exercise price, Warrants exercisable at end of period | $ / shares $ 0.023
v3.24.1.1.u2
STOCKHOLDERS DEFICIT (Details 1) - $ / shares
9 Months Ended
Mar. 31, 2024
Jun. 30, 2023
Warrants outstanding, number 5,114,576 5,115,207
Warrants outstanding, weighted average remaining contractual life 3 days 10 hours  
Warrants outstanding, weighted average exercise price $ 0.0169  
Warrants outstanding, weighted average exercise price $ 0.023  
Warrants exercisable, number 5,114,576  
Warrants exercisable, weighted average exercise price $ 0.023  
Warrant 1    
Range of Exercise Price $ 0.0169  
Warrants outstanding, number 5,112,426  
Warrants outstanding, weighted average remaining contractual life 3 days 10 hours  
Warrants outstanding, weighted average exercise price $ 0.0169  
Warrants exercisable, number 5,112,426  
Warrant 2    
Range of Exercise Price $ 12.285  
Warrants outstanding, number 1,339  
Warrants outstanding, weighted average remaining contractual life 12 hours  
Warrants outstanding, weighted average exercise price $ 12.285  
Warrants exercisable, number 1,339  
Warrants exercisable, weighted average exercise price $ 12.285  
Warrant 3    
Range of Exercise Price $ 20.385  
Warrants outstanding, number 811  
Warrants outstanding, weighted average remaining contractual life 12 hours  
Warrants outstanding, weighted average exercise price $ 20.385  
Warrants exercisable, number 811  
Warrants exercisable, weighted average exercise price $ 20.385  
v3.24.1.1.u2
STOCKHOLDERS DEFICIT (Details Narrative) - USD ($)
1 Months Ended 9 Months Ended
Sep. 30, 2022
Mar. 31, 2024
Jun. 30, 2023
Common stock, shares authorized   1,000,000,000 1,000,000,000
Common stock, shares issued   126,480,567 37,199,647
Common stock, shares outstanding   126,472,250 29,844,713
Loss on extinguishment of debt   $ 519,993  
Shares issued as compensation, shares   5,048,426  
Unvested shares issued for the restricted stock   8,309  
Warrant five year life[Member]      
Shares issued as Warrent, shares 138,667    
Exercise price, per share $ 1.35    
Convertible Notes Payable [Member]      
Shares price per share   $ 0.0125  
Shares issued as Convertible Notes Payable, shares   47,163,371  
Shares issued as Convertible Notes Payable, amount   $ 590,814  
Directors and officers [Member]      
Shares, par value   $ 0.0001  
Shares price per share   $ 0.0168  
Shares issued as compensation, shares   30,960,000  
Shares issued as compensation, amount   $ 520,624  
Consultants [Member]      
Shares, par value   $ 0.0001  
Shares price per share   $ 0.03  
Shares issued as compensation, shares   13,184,166  
Shares issued as compensation, amount   $ 417,887  
Compensation to employees [Member]      
Shares, par value   $ 0.0001  
Shares price per share   $ 0.0168  
Shares issued as compensation, shares   5,320,000  
Shares issued as compensation, amount   $ 89,407  
Minimum | Directors and officers [Member]      
Grant date quoted price   $ 0.0054  
Minimum | Consultants [Member]      
Grant date quoted price   0.0168  
Maximum | Directors and officers [Member]      
Grant date quoted price   0.0169  
Maximum | Consultants [Member]      
Grant date quoted price   0.3100  
Series A Convertible Preferred Stock [Member]      
Preferred stock, lower price per value   0.10  
Preferred Stock, Par Value   0.001 $ 0.001
Shares, par value   750  
Shares price per share   $ 0.035  
Preferred stock, shares authorized   20,000,000 20,000,000
Series B Convertible Preferred Stock [Member]      
Preferred Stock, Par Value   $ 0.001 $ 0.001
Shares price per share   $ 375  
Preferred stock, shares authorized   30,000,000 30,000,000
Series C Convertible Preferred Stock [Member]      
Common stock conversion price   $ 0.075  
Preferred Stock, Par Value   0.001 $ 0.001
Shares price per share   $ 100  
Preferred stock, shares authorized   30,000 30,000
v3.24.1.1.u2
STOCKBASED COMPENSATION (Details)
9 Months Ended 12 Months Ended
Mar. 31, 2024
Jun. 30, 2023
STOCKBASED COMPENSATION    
Forfeiture rate 0.00% 0.00%
Expected volatility 0.00% 0.00%
Risk-free interest rate 0.00% 0.00%
Expected dividend yield 0.00% 0.00%
v3.24.1.1.u2
STOCKBASED COMPENSATION (Details 1)
9 Months Ended
Mar. 31, 2024
USD ($)
$ / shares
shares
STOCKBASED COMPENSATION  
Options outstanding, beginning | shares 2,222
Granted | shares 0
Exercised | shares 0
Forfeiture and cancelled | shares 0
Options outstanding, ending | shares 2,222
Weighted average exercise price, beginning | $ / shares $ 27.00
Weighted average exercise price, granted | $ / shares 0
Weighted average exercise price, Forfeiture and cancelled | $ / shares 0
Weighted average exercise price, exercised | $ / shares 0
Weighted average exercise price, ending | $ / shares $ 27.00
Aggregate intrinsic value, beginning | $ $ 0
Aggregate intrinsic value, Forfeiture and cancelled | $ 0
Aggregate intrinsic value, Exercised | $ 0
Aggregate intrinsic value, Granted | $ 0
Aggregate intrinsic value, ending | $ $ 0
Weighted Average Remaining Term, begining 2 days 20 hours
Weighted Average Remaining Term, ending 2 days 1 hour
v3.24.1.1.u2
STOCKBASED COMPENSATION (Details 2) - $ / shares
9 Months Ended
Mar. 31, 2024
Jun. 30, 2023
Options outstanding 2,222 2,222
Outstanding Options, Weighted average remaining life 2 years 29 days  
Options outstanding, Exercise 2,222  
Weighted Averaged Remaining Life Exercise, option 2 years 29 days  
Weighted average exercised price, Outstanding options $ 27.00 $ 27.00
Weighted average exercise price, Exercise $ 27.00  
27.00    
Options outstanding 2,222  
Outstanding Options, Weighted average remaining life 2 years 29 days  
Options outstanding, Exercise 2,222  
Weighted Averaged Remaining Life Exercise, option 2 years 29 days  
Weighted average exercised price, Outstanding options $ 27.00  
Weighted average exercise price, Exercise $ 27.00  
v3.24.1.1.u2
STOCKBASED COMPENSATION (Details 3)
9 Months Ended
Mar. 31, 2024
$ / shares
shares
STOCKBASED COMPENSATION  
Restricted stock awards, unvested, beginning | shares 7,297,475
Restricted stock awards, granted | shares 42,425,000
Restricted stock awards, forfeited | shares (250,000)
Restricted stock awards, vested | shares (49,464,166)
Restricted stock awards, unvested, ending | shares 8,309
Weighted average grant date fair value, unvested, beginning | $ / shares $ 0.0536
Weighted average grant date fair value, granted | $ / shares 0.0169
Weighted average grant date fair value, forfeited | $ / shares 0.3100
Weighted average grant date fair value, vested | $ / shares 0.0207
Weighted average grant date fair value, unvested, ending | $ / shares $ 0.1100
v3.24.1.1.u2
STOCKBASED COMPENSATION (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Unrecognized compensation expense, restricted stock awards     $ 0
Stock-based compensation expense $ 1,027,918 $ 542,149  
Plan terminates period 10 days    
Options to purchase vested shares 2,222    
Options issued for purchase 11,852,000,000    
Average Price     $ 20.25
Fair value of shares $ 0.00    
Employees and directors      
Unrecognized compensation expense, restricted stock awards     $ 917
Stock-based compensation expense $ 1,027,918    
v3.24.1.1.u2
RELATED PARTY TRANSACTIONS (Details Narrative)
Mar. 31, 2024
USD ($)
RELATED PARTY TRANSACTIONS  
Due to officer $ 178,633
v3.24.1.1.u2
ACCRUED COMPENSATION (Details) - USD ($)
Mar. 31, 2024
Jun. 30, 2023
Total $ 1,833,529 $ 1,371,879
Officers    
Accrued compensation - officers 1,082,762 900,846
Staff    
Accrued compensation - officers $ 750,767 $ 471,033
v3.24.1.1.u2
COMMITMENTS AND CONTINGENCIES (Details Narrative)
9 Months Ended
Mar. 31, 2024
License Agreements [Member]  
Description of Provision for a royalty include provisions for a royalty payment on revenues collected of 6%
v3.24.1.1.u2
SUBSEQUENT EVENTS (Details Narrative) - USD ($)
1 Months Ended 9 Months Ended
May 31, 2024
Apr. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Common stock, par value per share     $ 0.0001 $ 0.0001
Shares issued as compensation, shares     5,048,426  
April 2024 [Member] | Consultants [Member]        
Common stock, vested, shares   11,558,333    
Common stock, par value per share   $ 0.0001    
Common stock, vested, amount   $ 49,427    
Common stock, shares vested, average price per share   $ 0.0043    
April And May 2024 [Member]        
Common stock, shares issued 12,687,917      
Common stock, par value per share $ 0.0001      
Common stock, issued amount $ 53,289      
Common stock, shares average price per share $ 0.0042      
April 2024 [Member] | Directors And Officers Member [Member]        
Common stock, par value per share   $ 0.0042    
Shares issued as compensation, amount   $ 126,000    
Shares issued as compensation, shares   30,000,000    
Shares price per share   $ 0.0001    
April 2024 [Member] | Employees [Member]        
Common stock, par value per share   $ 0.0042    
Shares issued as compensation, amount   $ 31,500    
Shares issued as compensation, shares   7,500,000    
Shares price per share   $ 0.0001    

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