UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the
fiscal year ended
June 30,
2021
or
[ ] 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)
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Florida
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7371
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87-0449667
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Number)
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(I.R.S. Employer
Identification Number)
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4094 Majestic Lane, Suite 360
Fairfax, VA 22033
(Address of Principal Executive Office)(Zip Code)
(703) 273-0383
(Registrant’s telephone number, including area
code)
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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N/A
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N/A
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Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par
value $0.0001
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No
[X]
Indicate
by check mark if the registrant is required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [X] No [
]
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 shorter
period that the registrant as required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Indicate
by check mark whether the Registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes [X] No [
]
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act.
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Large
accelerated filer [ ]
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Accelerated
filer [ ]
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Non-accelerated
filer [ ]
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Smaller
reporting company [X]
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Emerging
growth company [ ]
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If an
emerging growth company, indicate by checkmark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The
aggregate market value of the common equity voting shares of the
registrant held by non-affiliates on December 31, 2020 was
$16,484,000, at a share price of $0.0076 on that date. For purposes
of this calculation, an aggregate of 2,168,947,488 shares of Common
Stock were held by non-affiliates of the registrant on December 31,
2020 and have been included in the number of shares of Common Stock
held by affiliates.
The
number of the registrant’s shares of Common Stock outstanding
as of October 7, 2021: 3,512,404,577
In this
Annual Report on Form 10-K, the terms the “Company,”
“Visium,” “we,” “us” or
“our” refers to Visium Technologies, Inc., unless the
context indicates otherwise.
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WARNING CONCERNING FORWARD LOOKING STATEMENTS
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2
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2021 ANNUAL REPORT ON FORM 10-K
Table of Contents
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PART I
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4
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Item
1. Business.
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4
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Item
1A. Risk Factors.
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4
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Item
1B. Unresolved Staff Comments.
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7
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Item
2. Properties.
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7
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Item
3. Legal Proceedings.
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7
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Item
4. Mine Safety Disclosures.
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7
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PART II
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8
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Item
5. Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.
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8
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Item
6. Reserved.
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9
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Item
7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
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9
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Item
7A. Quantitative and Qualitative Disclosures About Market
Risk.
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14
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Item
8. Financial Statements and Supplementary Data.
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14
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Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
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14
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Item
9A. Controls and Procedures.
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14
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Item
9B. Other Information.
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15
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PART III
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16
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Item
11. Executive Compensation.
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19
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Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholders Matters.
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20
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Item
13. Certain Relationship and Related Party Transactions, and
Director Independence.
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20
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Item
14. Principal Accountant Fees and Services.
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22
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PART IV
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23
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Item
15. Exhibits and Financial Statement Schedules.
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23
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Item 16. Form 10-K Summary.
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23
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PART I
Item 1. Business
Overview
Visium
Technologies, Inc. was incorporated in Nevada as Jaguar
Investments, Inc. during October 1987. During March 2003, a wholly
owned subsidiary of the Company merged with Freight Rate, Inc., a
development stage company in the logistics software business.
During May 2003, the Company changed its name to Power2Ship, Inc.
During October 2006, the Company merged with a newly formed, wholly
owned subsidiary, Fittipaldi Logistics, Inc., a Nevada corporation,
with the Company surviving but its name changed to Fittipaldi
Logistics, Inc. effective November 2006. During December 2007, the
Company merged with a newly formed, wholly owned subsidiary,
NuState Energy Holdings, Inc., a Nevada corporation, with the
Company surviving but renamed NuState Energy Holdings, Inc.
effective December 2007. In March 2018, the Company brought in a
new management team and changed its name to Visium Technologies,
Inc.
Visium
is a provider of cyber security visualization, big data analytics,
and automation that operates in the traditional cyber security
space, as well as in the cloud-based technology and Internet of
Things spaces. Visium provides cybersecurity technology solutions,
tools, and services to support commercial enterprises and
government’s ability to protect their data. Visium’s
CyGraph technology provides visualization, advanced cyber
monitoring intelligence, data modeling, analytics, and automation
to help reduce risk, simplify cyber security, and deliver better
security outcomes.
In March 2019, Visium entered into a software license agreement
with MITRE Corporation to license a
patented technology,
known as CyGraph, a tool for cyber warfare analytics,
visualization, and knowledge management.
CyGraph is a military-grade highly scalable big
data analytics tool for Cybersecurity, based on graph database
technology. The development of the technology was sponsored by, and
is currently in use by US Army Cyber Command.
CyGraph provides
advanced analytics for cybersecurity situational awareness that is
scalable, flexible, and comprehensive. Visium has completed
significant proprietary product development efforts to
commercialize CyGraph whch the Company as rebranded as
TruContext.
Plan of Operation
Visium
operates in the traditional cyber security space, and provides
solutions, tools and services related to Security information and
event management (SIEM). Our
TruContext
technology provides
visualization, advanced cyber monitoring intelligence, data
modeling, analytics and automation to help reduce risk, simplify
cyber security and deliver better security outcomes. Visium
currently plans to generate revenue in three primary ways
–
●
through a
virtual appliance model
, primarily targeted to the Federal
government, charging a seat license
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through a
SaaS model
, charging a recurring monthly license fee for
TruContext; and
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through
professional services
to support and deliver cybersecurity
solutions and services to its customers
The Company has developed integration partnerships with larger
established technology companies and is using these partnerships as
part of its go-to-market strategy. In addtion, the Company
has partnered with value-added ressellers that sell to the federal
government and commercial markets. The Company is focused on
digital risk management, cybersecurity solutions, and technology
services for network physical security, the Cloud, and mobility
solutions. We solve mission-critical problems.
As of
September 30, 2021, we had eight (8) full time
employees.
Third-Party Service Providers
We are heavily reliant on our technology and infrastructure to
provide our products and services to our customers. For example, we
host many of our products using third-party data center facilities,
and we do not control the operation of these facilities. In
addition, we rely on certain technology that we license from third
parties, including third-party commercial software and open source
software, which is used with certain of our solutions.
Governmental Regulation
We collect, use, store or disclose an increasingly high volume,
variety, and velocity of personal information, including from
employees and customers, in connection with the operation of our
business. The personal information we process is subject to an
increasing number of federal, state, local, and foreign laws
regarding privacy and data security.
Competition
The markets for our solutions are highly competitive, and we expect
both the requirements and pricing competition to increase,
particularly given the increasingly sophisticated attacks, changing
customer preferences and requirements, current economic pressures,
and market consolidation. Competitive pressures in these markets
may result in price reductions, reduced margins, loss of market
share and inability to gain market share, and a decline in sales,
any one of which could seriously impact our business, financial
condition, results of operations, and cash flows. We may face
competition due to changes in the manner that organizations utilize
IT assets and the security solutions applied to them, such as the
provision of privileged account security functionalities as part of
public cloud providers’ infrastructure offerings, or
cloud-based identity management solutions. Limited IT budgets may
also result in competition with providers of other advanced threat
protection solutions such as McAfee, LLC, Palo Alto Networks,
Splunk Inc., and NortonLifeLock, Inc. (formerly known as Symantec
Corporation acquired by Broadcom Inc.). We also may compete, to a
certain extent, with vendors that offer products or services in
adjacent or complementary markets to privileged access management,
including identity management vendors and cloud platform providers
such as Amazon Web Services, Google Cloud Platform, and Microsoft
Azure.
Available Information
All reports of the Company filed with the SEC are available free of
charge through the SEC’s website at www.sec.gov. In addition,
the public may read and copy materials filed by the Company at the
SEC’s Public Reference Room located at 100 F Street, N.E.,
Washington, D.C. 20549. The public may also obtain additional
information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330.
Item 1A. Risk Factors
The
common shares of our Company are considered speculative. You should
carefully consider the following risks and uncertainties in
addition to other information in this annual report in evaluating
our Company and our business before purchasing our common shares.
Our business, operating or financial condition could be harmed due
to any of the following risks:
Management and our auditors have
raised substantial doubts as to our ability to continue as a going
concern
.
Our
financial statements have been prepared assuming we will continue
as a going concern. Since inception we have experienced recurring
net losses which losses caused an accumulated deficit of
approximately $51.4 million as of June 30, 2021. These factors,
among others, raise substantial doubt about our ability to continue
as a going concern. Our financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
The IT security market is rapidly evolving within the increasingly
challenging cyber threat landscape and the continuing use
of hybrid on-premise and cloud-based environments. As a result
of unanticipated market, industry or company developments our
sales may not continue to grow at current rates or may
decline, and our share price could decrease.
We operate in a rapidly evolving industry focused on securing
organizations’ IT systems and sensitive data. Our solutions
focus on safeguarding privileged accounts, credentials, and
secrets. Privileged accounts are those accounts within an
organization that give users, applications, and machine identities
the highest levels of access, or “privileged” access,
to IT systems and infrastructure, industrial control systems,
applications and data both on-premises and in cloud environments.
While breaches of such privileged accounts have continued to gain
media attention in recent years, IT security spending within
enterprises is often concentrated on endpoint and network security
products designed to stop threats from penetrating corporate
networks. Organizations may allocate all or most of their IT
security budgets to these products and may not adopt our solutions
in addition to such products. Organizations are moving portions of
their IT systems to be managed by third parties, primarily
infrastructure, platform and application service providers, and may
rely on such providers’ internal security
measures.
Further, security solutions such as ours, which are focused on
disrupting cyber attacks by insiders and external perpetrators that
have penetrated an organization’s on-premise or cloud
environment, represent a security layer designed to respond to
advanced threats and more rigorous compliance standards and audit
requirements. However, advanced cyber attackers are skilled at
adapting to new technologies and developing new methods of gaining
access to organizations’ sensitive data. As our
customers’ technologies and business plans evolve and become
more complex, we expect them to face new and increasingly
sophisticated methods of attack. We face significant challenges in
ensuring that our solutions effectively identify and respond to
such attacks without disrupting the performance of our
customers’ IT systems. As a result, we must continually
modify and improve our products, services, and licensing models in
response to market and technology trends to ensure we are meeting
market needs and continue providing valuable solutions that can be
deployed in a variety of environments, including cloud and
hybrid.
We cannot guarantee that we will be able to anticipate future
market needs and opportunities or be able to develop or acquire
product enhancements or new products to meet such needs or
opportunities in a timely manner or at all. Delays in developing,
completing or delivering new or enhanced products could cause our
offerings to be less competitive, impair customer acceptance of our
solutions and result in delayed or reduced revenue for our
solutions.
In addition, any changes in compliance standards or audit
requirements that reduce the priority for the types of controls,
security, monitoring and analysis that our solutions provide would
adversely impact demand for our solutions. It is therefore
difficult to predict how large the market will be for our
solutions. If our solutions are not viewed by organizations as
necessary, or if customers do not recognize the benefit of our
solutions as a critical layer of an effective security strategy,
then our revenues may not continue to grow at their current rate or
may decline, which could cause our share price to decrease in
value.
Our reputation and business could be harmed based on real or
perceived shortcomings, defects or vulnerabilities in our solutions
or the provision of our services, or due to the failure of our
customers, channel partners, managed security service providers,
or subcontractors to correctly implement, manage and maintain
our solutions, resulting in loss of existing or new customers,
lawsuits or financial losses.
Security products and solutions are complex in design and
deployment and may contain errors that are not capable of being
remediated or detected until after their deployment. Any errors,
defects, or misconfigurations could cause our products or services
to not meet specifications, be vulnerable to security attacks or
fail to secure networks and could negatively impact customer
operations and harm our business and reputation. In particular, we
may suffer significant adverse publicity and reputational harm,
including a downgrade in our industry leadership position by
industry analysts, if our solutions (or the services we provide in
relation to our solutions) are associated, or are believed to be
associated with, or fail to reasonably protect against, a
significant breach or a breach at a high profile customer, managed
service provider network, or third party system utilized by us as
part of our cloud-based security solution.
Further, the third party data hosting facilities used for the
provision of our SaaS solutions may experience damages,
interruptions or other unanticipated problems that could result in
disruptions in the provision of these solutions. Any disruptions or
other performance problems with our SaaS solutions could harm our
reputation and business, damage our customers’ businesses,
subject us to potential liability, cause customers to terminate or
not renew their subscriptions to our SaaS solutions and make it
more challenging for us to retain existing customers and acquire
new customers.
False detection of threats (referred to as “false
positives”), while typical in our industry, may reduce
perception of the reliability of our products and may therefore
adversely impact market acceptance of our products. If our
solutions restrict legitimate privileged access by authorized
personnel to IT systems and applications by falsely identifying
those users as attackers or otherwise unauthorized, our
customers’ businesses could be harmed.
Our solutions not only reinforce but also rely on the common
security concept of placing multiple layers of security controls
throughout an IT system. The failure of our customers, channel
partners, managed service providers or subcontractors to correctly
implement and effectively manage and maintain our solutions (and
the environments in which they are utilized), or to consistently
implement and utilize generally accepted and comprehensive,
multi-layered security measures and processes in customer networks,
may lessen the efficacy of our solutions.Additionally, our
customers or our channel partners may independently develop
plug-ins or change existing plug-ins or APIs that we provided to
them for interfacing purposes in an incorrect or insecure manner.
Such failures or actions may lead to security breaches and data
loss, which could result in a perception that our solutions failed.
Further, our failure to provide our customers and channel partners
with adequate services or inaccurate product documentation related
to the use, implementation and maintenance of our solutions, could
lead to claims against us.
An actual or perceived cyber attack, other security breach or theft
of our customers’ data, regardless of whether the breach or
theft is attributable to the failure of our products, SaaS
solutions or the services we provided in relation thereto, could
adversely affect the market’s perception of the efficacy of
our solutions and our industry standing, cause current or potential
customers to look to our competitors for alternatives to our
solutions and subject us to lawsuits, indemnity claims and
financial losses, as well as the expenditure of significant
financial resources to analyze, correct or eliminate any
vulnerabilities. In addition, provisions in our license agreements
that attempt to limit our liabilities towards our customers,
channel partners and relevant third parties may not withstand legal
challenges, and certain liabilities may not be limited or capped.
Additionally, any insurance coverage we may have may not adequately
cover all claims asserted against us or may cover only a portion of
such claims. An actual or perceived cyber attack could also cause
us to suffer reputational harm, lose existing customers and
potential new customers, or deter new and existing customers from
purchasing or implementing our products.
We face intense competition from a wide variety of IT security
vendors operating in different market segments and across diverse
IT environments, which may challenge our ability to maintain
or improve our competitive position or to meet our planned growth
rates.
The IT security market in which we operate is characterized by
intense competition, constant innovation, rapid adoption of
different technological solutions and services, and evolving
security threats. We compete with a multitude of companies that
offer a broad array of IT security products that employ different
approaches and delivery models to address these evolving
threats.
We may face competition due to changes in the manner that
organizations utilize IT assets and the security solutions applied
to them, such as the provision of privileged account security
functionalities as part of public cloud providers’
infrastructure offerings, or cloud-based identity management
solutions. Limited IT budgets may also result in competition with
providers of other advanced threat protection solutions such as
McAfee, LLC, Palo Alto Networks, Splunk Inc., and NortonLifeLock,
Inc. (formerly known as Symantec Corporation acquired by Broadcom
Inc.). We also may compete, to acertain extent, with vendors that
offer products or services in adjacent or complementary markets to
privileged access management, including identity management vendors
and cloud platform providers such as Amazon Web Services, Google
Cloud Platform, and Microsoft Azure. As the privileged access
management market has matured significantly over the recent years,
the entry barrier is now lower and it is easier for competitors to
compete in the market. Some of our competitors are large companies
and have widertechnical and financial resources and broader
customer bases used to bring competitive solutions to the market.
These companies may already have existing relationships as an
established vendor for other product offerings, and certain
customers may prefer one single IT vendor for product security
procurement rather than purchasing solely based on product
performance. Such companies may use these advantages to offer
products and services that are perceived to be as effective as ours
at a lower price or for free as part of a larger product package or
solely in consideration for maintenance and services fees, which
could result in increased market pressure to offer our solutions
and services at lower prices. They may also develop different
products to compete with our current solutions and respond more
quickly and effectively than we do to new or changing
opportunities, technologies, standards or client requirements or
enjoy stronger sales and service capabilities in certain regions.
Additionally, niche vendors are developing and marketing lower cost
solutions with limited privileged access management functionality
that may impact our ability to maintain premium market pricing. Our
competitors may enjoy potential competitive advantages over us,
such as:
●
greater name recognition, a longer operating history and a larger
customer base, notwithstanding the increased visibility of our
brand in recent years since our initial public
offering;
●
larger sales and marketing budgets and resources;
●
broader distribution and established relationships with channel
partners, advisory firms and customers;
●
increased effectiveness in protecting, detecting and responding to
cyber attacks;
●
greater or localized resources for customer support and provision
of services;
●
greater speed at which a solution can be deployed and
implemented;
●
greater resources to make acquisitions;
●
larger intellectual property portfolios; and
●
greater financial, technical and other resources.
Our current and potential competitors may also establish
cooperative relationships among themselves or with third parties
that may further enhance their resources and capabilities. Current
or potential competitors have been acquired and consolidated or may
be acquired by third parties with greater resources in the future.
As a result of such acquisitions, our current or potential
competitors may be able to adapt more quickly to new technologies
and customer needs, devote greater resources to the promotion or
sale of their products and services, initiate or withstand
substantial price competition, take advantage of other
opportunities more readily or develop and expand their product and
service offerings more quickly than we do. Larger competitors with
more diverse product offerings may reduce the price of products
that compete with ours in order to promote the sale of other
products or may bundle them with other products, which would lead
to increased pricing pressure on our products and could cause the
average sales prices for our products to decline. Similarly, we may
also face increased competition following an acquisition of new
lines of business that compete with providers of such technologies
or from security vendors or other companies in adjacent markets
extending their solutions into privilege access management. We may
be at a competitive disadvantage to our privately-held competitors,
as they may not face the same accounting, auditing and legal
standards we do as a public company. Such privately-held
competitors may face less public scrutiny than we do and may be
less risk-averse than we are, and therefore may have greater
operational flexibility.
Furthermore, an increasing number of independent industry analysts
and researchers, regularly evaluate, compare and publish reviews
regarding the functionality of IT security products, including
ours. These reviews may significantly influence the market
perception of our products, and our reputation and brand could be
harmed if they publish negative reviews of our products or
increasingly positive reviews of our competitors’ products,
or do not view us as a market leader.
In addition, other IT security technologies exist or could be
developed in the future by current or future competitors, and our
business could be materially and adversely affected if such
technologies are widely adopted. We may not be able to successfully
anticipate or adapt to changing technology or customer requirements
on a timely basis, or at all. If we fail to keep up with
technological changes or to convince our customers and potential
customers of the value of our solutions even in light of new
technologies, our business, results of operations and financial
condition could be materially and adversely affected.
If we are unable to increase sales of our solutions to new
customers, our future results of operations may be
harmed.
An important part of our growth strategy involves continued
investment in direct marketing efforts, channel partner
relationships, and infrastructure to add new customers. The number
and rate at which new customers may purchase our products and
services depends on a number of factors, including those outside of
our control, such as customers’ perceived need for our
solutions, competition, general economic conditions, market
transitions, product obsolescence, technological change, shifts in
buying patterns, the timing and duration of hardware refresh
cycles, financial difficulties and budget constraints of our
current and potential customers, public awareness of security
threats to IT systems, and other factors. These new customers, if
any, may renew their contracts with us and purchase additional
solutions at lower rates than we have experienced in the past,
which could affect our financial results.
We rely on large amounts of data from a variety of sources to
support our solutions and the loss of access to or the rights to
use such data could reduce the efficacy of our solutions and harm
our business.
Like many of our industry peers, we leverage large amounts of data
related to threats, vulnerabilities, cyberattacks, and other
cybersecurity intelligence to develop and maintain a number of our
products and services. We collect, develop and store portions of
this data using third parties and our own technology. We cannot be
assured that such third parties or our technology that support the
collection, development or storage of such data, and the sources of
such data itself, will continue to be effective or available and
the loss or reduction in quality of such data may adversely impact
the efficacy of our solutions. Changes in laws or regulations in
the United States or foreign jurisdictions or the actions of
governmental or quasi-governmental entities may increase the costs
to collect, develop or store such data, partially or completely
prohibit use of such, or could result in disclosure of such data to
the public or other third parties, which may reduce its value to us
or as part of our solutions and thereby harm our
business.
We currently have a working capital deficit and negative cash flow
from operations and are uncertain if and when we will be able to
pay our current liabilities.
Our
working capital deficit was approximately $2.9 million as of June
30, 2021. This deficit consists of $181,000 in current assets,
offset by $3,018,000 in current liabilities. In addition, we had
negative cash flow from operations for the year ended June 30, 2021
of approximately $793,000. We do not have any liquid or other
assets that can be liquidated to pay our current liabilities while
we continue to incur additional liabilities to our officer and
certain service providers who are working to prepare the documents
required to be filed with the Securities and Exchange Commission to
enable our common shares to be registered for trading. Since we
currently have limited operations, the only ways we have of paying
our current liabilities are to issue our common or preferred shares
to our creditors or to issue unsecured promissory notes which may
include certain features such as convertibility into common or
preferred shares or warrants to purchase additional common or
preferred shares in the future.
We had $1,735,057 of convertible notes, notes payable, and accrued
interest payable as of June 30, 2021, of which $622,260 of this
amount is past due, and we do not have the funds necessary to pay
these obligations.
In
addition to funding our operating expenses, we need capital to pay
various debt obligations totaling approximately $622,260 as of June
30, 2021 which are either currently past due or which are due in
the current fiscal year. Currently, there is $471,974 principal
amount of the convertible notes payable which is past due, $205,000
principal of the notes payable which is past due, and $341,717 of
accrued interest which is past due. The interest on the past due
principal amounts will continue to accrue monthly at their stated
rates. Holders of past due notes do not have a security interest in
our assets. The existence of these obligations provides additional
challenges to us in our efforts to raise capital to fund our
operations.
In the event we consummate a transaction with a profitable company,
we may not be able to utilize our net operating loss carryover
which may have a negative impact on your investment.
If we
enter into a combination with a business that has operating income,
we cannot assure you that we will be able to utilize all or even a
portion of our existing net operating loss carryover for federal or
state tax purposes following such a business combination. If we are
unable to make use of our existing net operating loss carryover,
the tax advantages of such a combination may be limited, which
could negatively impact the price of our stock and the value of
your investment. These factors will substantially increase the
uncertainty, and thus the risk, of investing in our
shares.
Economic conditions may affect our ability to obtain financing and
to complete a merger or acquisition.
Due to
general economic conditions, rapid technological advances being
made in some industries, and shortages of available capital, our
management believes that there are numerous firms seeking even the
limited additional capital which we will need. In the presence of
these economic conditions, we may have difficulty raising
sufficient capital to support the investigation of potential
business opportunities, and to consummate a merger or acquisition.
These factors substantially increase the uncertainty, and thus the
risk, of investing in our shares.
In
December 2019, a novel coronavirus (“COVID-19”) emerged
and has subsequently spread worldwide. The World Health
Organization has declared COVID-19 a pandemic resulting in federal,
state, and local governments mandating various restrictions,
including travel restrictions, restrictions on public gatherings,
stay at home orders and advisories and quarantining of people who
may have been exposed to the virus.
The Delta
variant of COVID-19, which appears to be the most transmissible and
contagious variant to date, has caused a surge in COVID-19 cases
globally. The impact of the Delta variant, or other variants
that may emerge, cannot be predicted at this time, and could depend
on numerous factors, including the availability of vaccines in
different parts of the world, vaccination rates among the
population, the effectiveness of COVID-19 vaccines against
the Delta variant and other variants, and the response by
governmental bodies to reinstate mandated business closures, orders
to “shelter in place,” and travel and transportation
restrictions.
As the
COVID-19 pandemic is complex and rapidly changing, the full extent
and duration of the impact of COVID-19 on the Company’s
operation and financial performance is currently unknown and
depends on future developments that are uncertain and
unpredictable, including the duration and spread of the pandemic,
its impact on capital and financial markets.
There are a number of factors related to our common stock which may
have an adverse effect on our shareholders.
Shareholders’
interests in our Company will be diluted and investors may suffer
dilution in their net book value per share if we issue additional
shares or raise funds through the sale of equity securities. In the
event that we are required to issue additional shares, enter into
private placements to raise financing through the sale of equity
securities or acquire business interests in the future from the
issuance of shares of our common stock to acquire such interests,
the interests of existing shareholders in our Company will be
diluted and existing shareholders may suffer dilution in their net
book value per share depending on the price at which such
securities are sold. If we do issue additional shares, it will
cause a reduction in the proportionate ownership and voting power
of all existing shareholders.
We have certain provisions in our Articles of Incorporation and
Bylaws, and there are other provisions under Florida law, that may
serve to make a takeover of our Company more
difficult.
Provisions
of our articles of incorporation and bylaws may delay or prevent a
takeover which may not be in the best interests of our
stockholders. Provisions of our articles of incorporation and
bylaws may be deemed to have anti-takeover effects, which include
when and by whom special meetings of our stockholders may be
called, and may delay, defer, or prevent a takeover attempt. In
addition, certain provisions of Florida law also may be deemed to
have certain anti-takeover effects which include that control of
shares acquired in excess of certain specified thresholds will not
possess any voting rights unless these voting rights are approved
by a majority of a corporation’s disinterested
stockholders.
Voting power of our shareholders is highly concentrated by
insiders.
Our
officers and directors control, either directly or indirectly, a
substantial portion of our voting securities. As of June 30, 2021,
our executive officer and directors beneficially owns 662,294,903
shares of Common Stock, or approximately 22% of our outstanding
shares of Common Stock. In addition, our executive officer owns the
only issued and outstanding share of Series AA Convertible
Preferred Stock which entitles him to 51% of the Common votes on
any matter requiring a shareholder vote. Therefore, our management
may significantly affect the outcome of all corporate actions and
decisions for an indefinite period of time including the election
of directors, amendment of charter documents and approval of
mergers and other significant corporate transactions.
Our common stock is quoted in the over the counter market on the
OTC Pink.
Our
common stock is quoted on the OTC Pink. OTC Pink offers a quotation
service to companies that are unable to list their securities on an
exchange or for companies, such as ours, whose securities are not
eligible for quotation on the OTC Bulletin Board. The requirements
for quotation on the OTC Pink are considerably lower and less
regulated than those of the OTC Bulletin Board or an exchange.
Because our common stock is quoted on the OTC Pink, it is possible
that even fewer brokers or dealers would be interested in making a
market in our common stock which further adversely impacts its
liquidity.
The tradability of our common stock is limited under the penny
stock regulations which may cause the holders of our common stock
difficulty should they wish to sell their shares.
Because
the quoted price of our common stock is less than $5.00 per share,
our common stock is considered a “penny stock,” and
trading in our common stock is subject to the requirements of Rule
15g-9 under the Exchange Act. Under this rule, broker/dealers who
recommend low-priced securities to persons other than established
customers and accredited investors must satisfy special sales
practice requirements. The broker/dealer must make an
individualized written suitability determination for the purchaser
and receive the purchaser’s written consent prior to the
transaction. SEC regulations also require additional disclosure in
connection with any trades involving a “penny stock,”
including the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and its
associated risks. These requirements severely limit the liquidity
of securities in the secondary market because few broker or dealers
are likely to undertake these compliance activities and this
limited liquidity will make it more difficult for an investor to
sell his shares of our common stock in the secondary market should
the investor wish to liquidate the investment. In addition to the
applicability of the penny stock rules, other risks associated with
trading in penny stocks could also be price fluctuations and the
lack of a liquid market.
Our Share Price Is Volatile And May Be Influenced By Numerous
Factors That Are Beyond Our Control.
Market prices for shares of technology companies such as ours are
often volatile. The market price of our common stock may fluctuate
significantly in response to a number of factors, most of which we
cannot control, including:
|
|
●
|
fluctuations
in digital currency and stock market prices and trading volumes of
similar companies;
|
|
|
|
|
|
|
●
|
general
market conditions and overall fluctuations in U.S. equity
markets;
|
|
|
|
|
|
|
●
|
sales
of large blocks of our common stock, including sales by our
executive officers, directors and significant
stockholders;
|
|
|
|
|
|
|
●
|
discussion
of us or our stock price by the press and by online investor
communities; and
|
|
|
|
|
|
|
●
|
other
risks and uncertainties described in these risk
factors.
|
We Have No Current Plans To Pay Dividends On Our Common Stock And
Investors Must Look Solely To Stock Appreciation For A Return On
Their Investment In Us.
We do not anticipate paying any further cash dividends on our
common stock in the foreseeable future. We currently intend to
retain all future earnings to fund the development and growth of
our business. Any payment of future dividends will be at the
discretion of our board of directors and will depend on, among
other things, our earnings, financial condition, capital
requirements, level of indebtedness, statutory and contractual
restrictions applying to the payment of dividends and other
considerations that the board of directors deems relevant.
Investors may need to rely on sales of their common stock after
price appreciation, which may never occur, as the only way to
realize a return on their investment. Investors seeking cash
dividends should not purchase our common stock.
Item 1B. Unresolved Staff Comments.
Not
applicable.
Item 2. Properties.
Our principal offices are located at
4094 Majestic Lane, Suite 360, Fairfax, Virginia 22033.
We
rent our principal executive office from an unrelated third party
on an annual basis for $420 per year.
We
currently operate in a virtual office arrangement.
Our telephone number is (703)
273-0383
.
Item 3. Legal Proceedings.
In July
2018 the Company was named as the defendant in a legal proceeding
brought by Tarpon Bay Partners LLC (the “Plaintiff”) in
the Judicial District Court of Danbury, Connecticut. Plaintiff
asserts that the Company failed to convert two convertible notes
held by Plaintiff. The Company is vigorously contesting this claim.
There are no other proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial
stockholder, is an adverse party or has a material interest adverse
to our interest.
In
January 2021 the Company won a dismissal of an involuntary
bankruptcy petition that was filed against the Company in the
Southern District Court of Florida on December 30, 2020, which had
been brought by three parties, (i) Tarpon Bay Partners LLC, (ii)
J.P. Carey Enterprises Inc., and (iii) Anvil Financial Mgmt LLC
(collectively the "Petitioning Creditors").
The
Court ruled in the Company's favor, dismissing the involuntary
bankruptcy petition and allowing the Company to file a motion with
the Court seeking compensatory and punitive damages. In addition,
Visium plans to file an affidavit of fees and costs incurred in
connection with Visium's defense of the Involuntary
Petition.
In
March 2021 the Company filed a Complaint for Damages and Other
Relief against Tarpon Bay Partners, LLC, a Florida limited
liability company; J.P. Carey Enterprises, Inc., a Florida profit
corporation; Anvil Financial Management, LLC, a Florida limited
liability company; Stephen Hicks, an individual; Joseph C Canouse,
an individual; Jeffrey M. Canouse, an individual; Paul A. Rachmuth,
an individual; and Litt Law Group, LLC, a New York Limited
Liability Company (collectively the “Defendants”)
related to the involuntary bankruptcy petition. The Company is
seeking damages from the Defendants for reasonable attorneys’
fees and costs, as well as compensatory, consequential special and
punitive damages.
Item 4. Mine Safety Disclosures.
Not
applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters, and Issuer Purchases of Equity
Securities.
Our
common shares are quoted on the OTC Pink Quotation System under the
symbol “VISM,” but trade infrequently.
The
high and low bid prices of our common stock for the periods
indicated below are as follows:
Fiscal
Year Ended June 30, 2021
|
|
High
|
|
Low
|
|
Quarter
Ended September 30, 2020
|
$0.0017
|
|
$0.0004
|
|
Quarter
Ended December 31, 2020
|
$0.0109
|
|
$0.0004
|
|
Quarter
Ended March 31, 2021
|
$0.0500
|
|
$0.0040
|
|
Quarter
Ended June 30, 2021
|
$0.0188
|
|
$0.00595
|
Fiscal
Year Ended June 30, 2020
|
|
High
|
|
Low
|
|
Quarter
Ended September 30, 2019
|
$0.1000
|
|
$0.0050
|
|
Quarter
Ended December 31, 2019
|
$0.0160
|
|
$0.0015
|
|
Quarter
Ended March 31, 2020
|
$0.0034
|
|
$0.0007
|
|
Quarter
Ended June 30, 2020
|
$0.0020
|
|
$0.0002
|
Stockholders
As of
September 30, 2021, there were 4,800 stockholders of record of our
Common Stock.
Dividend Policy
We have not declared or paid any cash dividends on our common stock
and do not anticipate declaring or paying any cash dividends in the
foreseeable future. We currently expect to retain future earnings,
if any, for the development of our business.
Recent Sales of Unregistered Securities
During
the year ended June 30, 2021 the Company issued 524,543,160 shares
of its common stock related to the conversion of $188,460 of
principal and accrued interest of its convertible notes payable, at
an average contract conversion price of $0.00037 per share. The
fair value of the shares issued was $2,422,722.
Stock Based Compensation and Stock Based Consulting Services
Expense
During
the year ended June 30, 2021 the Company issued 56,666,669 shares
of its $0.0001 par value common stock to five consultants, as
compensation for services rendered. The shares were valued at
$354,000, or $0.0046 per share.
During
the year ended June 30, 2021 the Company issued 220,000,000 shares
of its $0.0001 par value common stock to our Directors and Officer,
as compensation for services rendered. The shares were valued at
$2,809,000, or $0.0128 per share.
Warrants
During
the fiscal year ended June 30, 2021 the Company issued 375,934,483
shares of its $0.0001 par value common stock pursuant to the
cashless exercise of warrants. The warrant shares were valued at
$211,411, or 0.00061 per share.
All the securities described above were issued in transactions
exempt from registration under the Securities Act, as transactions
not involving a public offering, pursuant to Section 4(a)(2) of the
Securities Act or Regulation D promulgated thereunder. The
recipient
of such securities
represented its intention to acquire the securities for investment
purposes only and not with a view to or for sale in connection with
any distribution thereof
Funding
During
the fiscal year ended June 30, 2021 the Company issued 225,000,000
shares of its $0.0001 par value common stock to four investors as
commitment shares pursuant to the issuance of promissory
notes.
Rule 10B-18 Transactions
During
the year ended June 30, 2021, there were no repurchases of the
Company’s common stock by the Company.
Item 6. Selected Financial Data.
As a
“smaller reporting company”, we are not required to
provide information required by this item.
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The
following information should be read in conjunction with our
financial statements and accompanying notes included in this Annual
Report on Form 10-K.
Overview
The
Company was incorporated in Nevada as Jaguar Investments, Inc.
during October 1987. During March 2003, a wholly owned subsidiary
of the Company merged with Freight Rate, Inc., a development stage
company in the logistics software business. During May 2003, the
Company changed its name to Power2Ship, Inc. During October 2006,
the Company merged with a newly formed, wholly owned subsidiary,
Fittipaldi Logistics, Inc., a Nevada corporation, with the Company
surviving but its name changed to Fittipaldi Logistics, Inc.
effective November 2006. During December 2007, the Company merged
with a newly formed, wholly owned subsidiary, NuState Energy
Holdings, Inc., a Nevada corporation, with the Company surviving
but renamed NuState Energy Holdings, Inc. effective December 2007.
In March 2019, the Company changed its name to Visium Technologies,
Inc.
Since
February 12, 2018 Mark Lucky has served as Chairman and CEO. He
currently also serves as CFO. The Company’s headquarters is
located at 4094 Majestic Lane, Suite 360, Fairfax, VA 22124. Since
February 2018, the Company has focused on creating a world-class
cybersecurity/digital risk management company, with a focus on
network security, threat visualization, pinpoint threat
identification, and big-data analytics. Our solutions address the
growing security and compliance complexities and risks resulting
from the increasing adoption of cloud computing and the
proliferation of geographically dispersed IT assets.
In March 2019, Visium entered into a software license agreement
with MITRE Corporation to license a
patented technology,
known as CyGraph, a tool for cyber warfare analytics,
visualization, and knowledge management.
CyGraph is a military-grade highly scalable big
data analytics tool for Cybersecurity, based on graph database
technology. The development of the technology was sponsored by, and
is currently in use by US Army Cyber Command.
CyGraph provides
advanced analytics for cybersecurity situational awareness that is
scalable, flexible, and comprehensive. Visium has completed
significant proprietary product development efforts to
commercialize CyGraph.
During fiscal 2021 the
Company rebranded CyGraph as TruContext
TM
to reflect
the enhanced version of the software tool which resulted from
significant proprietary development of the
software.
Results of Operations
Development Expense
For the
year ended June 30, 2021, development expense totaled $258,168 as
compared to $35,500 for the year ended June 30, 2020, an increase
of $222,668 or approximately 627%.
Selling, General, and Administrative Expenses
For the
year ended June 30, 2021, selling, general and administrative
expenses were $3,879,158 as compared to $917,993 for the year ended
June 30, 2020, an increase of $2,961,165 or approximately 322.6%.
For the years ended June 30, 2021 and 2020 selling, general and
administrative expenses consisted of the following:
|
|
|
2021
|
|
|
2020
|
|
|
Increase/
(Decrease)
|
|
|
% Change
|
|
||||
|
Accounting
expense
|
|
$
|
50,305
|
|
|
$
|
5,581
|
|
|
$
|
44,724
|
|
|
|
56.3
|
%
|
|
Consulting
fees
|
|
|
56,455
|
|
|
|
103,800
|
|
|
|
(47,345
|
)
|
|
|
(157.8
|
%)
|
|
Salaries
|
|
|
374,000
|
|
|
|
336,000
|
|
|
|
38,000
|
|
|
|
11.3
|
%
|
|
Legal
and professional fees
|
|
|
144,180
|
|
|
|
59,550
|
|
|
|
84,630
|
|
|
|
142.1
|
%
|
|
Travel
expense
|
|
|
1,459
|
|
|
|
9,786
|
|
|
|
(8,327
|
)
|
|
|
(85.1
|
%)
|
|
Occupancy
expense
|
|
|
369
|
|
|
|
4,719
|
|
|
|
(4,350
|
)
|
|
|
(92.2
|
%)
|
|
Telephone
expense
|
|
|
3,630
|
|
|
|
3,600
|
|
|
|
30
|
|
|
|
0.8
|
%
|
|
Marketing
expense
|
|
|
5,877
|
|
|
|
8,199
|
|
|
|
(2,322
|
)
|
|
|
(28.3
|
%)
|
|
Website
expense
|
|
|
6,284
|
|
|
|
2,951
|
|
|
|
3,333
|
|
|
|
112.9
|
%
|
|
Investor
relations expense
|
|
|
15,000
|
|
|
|
20,000
|
|
|
|
(5,000
|
)
|
|
|
(25.0
|
%)
|
|
Stock
based consulting expense
|
|
|
372,553
|
|
|
|
198,735
|
|
|
|
173,818
|
|
|
|
87.5
|
%
|
|
Stock
based compensation
|
|
|
2,809,000
|
|
|
|
148,000
|
|
|
|
2,661,000
|
|
|
|
1798.0
|
%)
|
|
Other
|
|
|
40,046
|
|
|
|
17,072
|
|
|
|
22,974
|
|
|
|
134.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,879,158
|
|
|
$
|
917,993
|
|
|
$
|
2,961,165
|
|
|
|
322.6
|
%
|
The
increase in selling, general and administrative expenses during
fiscal 2021, when compared with the prior year, is primarily due to
an increase in stock-based compensation, legal expenses, and
salaries, offset by increases in accounting expenses.
Change in Fair Value of Derivative Liability
|
|
|
Years ended
|
|
|||||
|
|
|
June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
Gain on
change in fair value of derivative liabilities
|
|
$
|
1,844,460
|
|
|
$
|
385,367
|
|
Changes
in fair value of derivative liabilities results from the changes in
the fair value of the derivative liability due to the application
of ASC 815, resulting in either income or expense, depending on the
difference in fair value of the derivative liabilities between
their measurement dates. The increase in fair value of derivative
liabilities recognized during fiscal 2021 is primarily due to a
change in accounting estimate related to the accounting for
derivative liabilities as a result of a decrease in share
price.
Derivative Liability Expense
|
|
|
Years Ended
|
|
|
|
|
||||||
|
|
|
June 30,
|
|
|
%
|
|
||||||
|
|
|
2021
|
|
|
2020
|
|
|
Change
|
|
|||
|
Derivative
liability expense
|
|
$
|
1,059,282
|
|
|
$
|
61,396
|
|
|
|
1,625.3
|
%
|
The
Company issued convertible notes in January 2021 and June 2021
which provisions contained variable price conversion terms,
resulting in a derivative liability expense, measured as of the
issuance date of the notes.
Interest Expense
|
|
|
Years Ended
|
|
|
|
|
||||||
|
|
|
June 30,
|
|
|
%
|
|
||||||
|
|
|
2021
|
|
|
2020
|
|
|
Change
|
|
|||
|
Interest
Expense
|
|
$
|
442,167
|
|
|
$
|
323,021
|
|
|
|
36.9
|
%
|
Interest
expense represents the stated interest of notes and convertible
notes payable as well as the amortization of debt discount. The
increase in interest expense during fiscal 2021 is primarily due to
higher amortization of debt discount of $99,250.
Gain on Debt Write-Off
|
|
|
Years Ended
|
|
|||||
|
|
|
June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
Gain
(loss) on debt write off/conversions
|
|
$
|
607,271
|
|
|
$
|
(593,907
|
)
|
In June 2021 the Company obtained a legal opinion to extinguish
aged debt totaling $787,272 as detailed in the following table.
Each of the individual debt instruments were determined to be
beyond the statute of limitations and it was determined that the
Company has a complete defense to liability related to this debt
under the applicable statute of limitations.
|
Accrued
interest payable
|
|
$
|
385,803
|
|
|
Convertible
notes payable
|
|
|
401,469
|
|
|
|
|
$
|
787,272
|
|
|
|
|
Balance at June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
Cash
|
|
$
|
125,166
|
|
|
$
|
30,251
|
|
|
Accounts
payable and accrued expenses
|
|
|
(425,804
|
)
|
|
|
(333,805
|
)
|
|
Accrued
compensation
|
|
|
(672,529
|
)
|
|
|
(652,529
|
)
|
|
Notes,
convertible notes, and accrued interest
|
|
$
|
(1,735,057
|
)
|
|
$
|
(1,883,784
|
)
|
At June
30, 2021 our total assets consisted of cash and prepaid license
fees. At June 30, 2020 our total assets consisted entirely of
cash.
We do
not have any material commitments for capital
expenditures.
The
objective of liquidity management is to ensure that we have ready
access to sufficient funds to meet commitments and effectively
implement our growth strategy. Our primary sources are financing
activities such as the issuance of notes payable and convertible
notes payable. In the past, we have mostly relied on debt and
equity financing to provide for our operating needs.
We were
unable to generate sufficient funds from operations to fund our
ongoing operating requirements through June 30, 2021. As of
September 30, 2021, we had approximately $1.0 million on hand. We
may need to raise funds to enhance our working capital and use them
for strategic purposes. If such need arises, we intend to generate
proceeds from either debt or equity financing.
We
intend to finance our operations using equity financing. We do not
anticipate incurring capital expenditures for the foreseeable
future. We anticipate that we will need to raise approximately
$180,000 per year in the near term to finance the recurring costs
of being a publicly traded company.
Going Concern
The
accompanying financial statements have been prepared on a going
concern basis. The Company has used net cash in its operating
activities of $792,640 and $106,757 during the years ended June 30
2021 and 2020, respectively, and has a working capital deficit of
approximately $2.8 million and $3.4 million at June 30, 2021 and
2020, respectively. The Company’s ability to continue as a
going concern is dependent upon its ability to obtain the necessary
financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due, to fund
possible future acquisitions, and to generate profitable operations
in the future, once a merger with an operating company is
consummated. Management plans may continue to provide for its
capital requirements by issuing additional equity securities and
debt and the Company will continue to find possible acquisition
targets. The outcome of these matters cannot be predicted at this
time and there are no assurances that, if achieved, the Company
will have sufficient funds to execute its business plan or generate
positive operating results.
|
|
|
Years Ended
|
|
|||||
|
|
|
June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(3,373,459
|
)
|
|
$
|
(1,542,450
|
)
|
|
Non-cash
Adjustments:
|
|
|
|
|
|
|
|
|
|
(Gain)
loss on debt settlement and write off expense
|
|
|
(607,271
|
)
|
|
|
593,907
|
|
|
Stock
based compensation
|
|
|
3,163,000
|
|
|
|
346,735
|
|
|
Amortization of
debt discount
|
|
|
305,499
|
|
|
|
206,249
|
|
|
Derivative
liability expense
|
|
|
1,059,282
|
|
|
|
61,396
|
|
|
(Gain)
loss on change in derivative liability
|
|
|
(1,844,460
|
)
|
|
|
(385,367
|
)
|
|
Warrant
conversion expense
|
|
|
211,411
|
|
|
|
-
|
|
|
Changes
in assets and liabilities
|
|
|
|
|
|
|
|
|
|
Accrued
interest
|
|
|
96,007
|
|
|
|
145,941
|
|
|
Accrued
compensation
|
|
|
20,000
|
|
|
|
336,000
|
|
|
Accounts payable
and accrued expenses
|
|
|
445,850
|
|
|
|
130,832
|
|
|
Prepaid
license fees
|
|
|
(55,417
|
)
|
|
|
-
|
|
|
Discount on note
payable
|
|
|
(213,082
|
)
|
|
|
-
|
|
|
Net
cash used in operations
|
|
|
(792,640
|
)
|
|
|
(106,757
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Advance
from officers, net
|
|
|
(102,340
|
)
|
|
|
40,340
|
|
|
Repayment
of convertible notes payable
|
|
|
(73,700
|
)
|
|
|
-
|
|
|
Proceeds
from issuance of short term notes payable
|
|
|
225,000
|
|
|
|
-
|
|
|
Proceeds
from issuance of convertible notes payable, net of debt issuance
costs
|
|
|
838,595
|
|
|
|
78,000
|
|
|
Net
cash provided by financing activities
|
|
|
887,555
|
|
|
|
118,340
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash
|
|
$
|
94,915
|
|
|
$
|
11,583
|
|
Year ended June 30, 2021
Net
cash used in operations in fiscal year 2021 increased by $685,883
or 646% from fiscal year 2020. This cash was obtained through the
sale of three convertible notes that netted the Company $838,595,
and from the sale of three short term notes payable that netted the
Company $225,000.
Year ended June 30, 2020
Net
cash used in operations in fiscal year 2020 decreased by $459,987
or 81% from fiscal year 2019. This increase in cash was due to the
sale of three convertible notes that netted the Company $78,000,
and through advances of cash made to the Company by its officers
and directors of $40,340.
Capital Raising Transactions
Issuance of Convertible Notes Payable
We
generated net proceeds of $838,595 and $78,000 during fiscal 2021
and 2020, respectively, from the issuance of convertible notes
payable. We generated net proceeds of $225,000 during fiscal 2021
from the issuance of short term notes payable.
Convertible Notes Payable
The
Company had convertible promissory notes aggregating approximately
$809,000 and $853,000 outstanding at June 30, 2021 and 2020,
respectively. The accrued interest amounted to approximately
$163,000 and $503,000 at June 30, 2021 and 2020, respectively.
There is no provision in the note agreements for adjustments to the
interest rates on these notes in the event of default. The
convertible notes payable bear interest at rates ranging between
10% and 18% per annum. Interest is generally payable monthly. The
Convertible Notes Payable are generally convertible at rates
ranging between $0.0002 and $22,500 per share, at the
holders’ option. At June 30, 2021, all convertible promissory
notes have matured.
|
|
|
Balance at
|
|
|
Balance at
|
|
||
|
|
|
June 30, 2021
|
|
|
June 30, 2020
|
|
||
|
Convertible
notes payable
|
|
$
|
1,205,228
|
|
|
$
|
852,962
|
|
|
Discount
on convertible notes
|
|
|
(396,033
|
)
|
|
|
-
|
|
|
Notes
payable, net of discount
|
|
$
|
809,195
|
|
|
$
|
852,962
|
|
Convertible notes payable to ASC Recap LLC
On July
22, 2013 and May 6, 2014, the Company issued to ASC Recap LLC
(“ASC”) two convertible promissory notes with principal
amounts of $25,000 and $125,000, respectively. These two notes were
issued as a fee for services under a 3(a)10 transaction that was
never consummated and therefore there was no performance by ASC to
earn the notes. As a result, while the Company continues to carry
the balance of these notes on its balance sheet, it does not
believe the notes payable balances are owed. The July 22, 2013 note
matured on March 31, 2014 and a balance of $22,965 remains unpaid.
The May 6, 2014 note matured on May 6, 2016 and remains unpaid. The
notes are convertible into the common stock of the Company at any
time at a conversion price equal to 50% of the lowest closing bid
price of our common stock for the twenty days prior to
conversion.
Notes Payable
The
Company had promissory notes aggregating approximately $430,000 at
June 30, 2021 and $205,000 at June 30, 2020. The related accrued
interest amounted to approximately $203,400 and $175,000 at June
30, 2021 and 2020, respectively. There is no provision in the note
agreements for adjustments to the interest rates on these notes in
the event of default. The notes payable bear interest at rates of
16% per annum. Interest is generally payable monthly. $205,000 of
these notes have matured as of June 30, 2021.
Common Stock Warrants
In
January and February 2021, we issued 39,370,677 warrants with a two
year life, and fixed exercise prices ranging from $0.0055 to $0.02
per share. An additional 9,239,130 warrant shares were issued due
to repricing certain warrants with a $0.02 exercise price to a
$0.0115 exercise price.
In
January 2019 we issued 500,000 warrants with a three year life and
a conversion price of $0.15 per share. These warrants had price
protection provisions that allow for the reduction in the current
exercise price upon the occurrence of certain events, including the
Company’s issuance of common stock or securities convertible
into or exercisable for common stock, such as options and warrants,
at a price per share less than the exercise price then in effect.
For instance, if the Company issues shares of its common stock or
options exercisable for or securities convertible into common stock
at an effective price per share of common stock less than the
exercise price then in effect, the exercise price will be reduced
to the effective price of the new issuance. Simultaneously with any
reduction to the exercise price, the number of shares of common
stock that may be purchased upon exercise of each of these warrants
shall be increased proportionately, so that after such adjustment
the aggregate exercise price payable for the adjusted number of
warrants shall be the same as the aggregate exercise price in
effect immediately prior to such adjustment.
The
holders of the warrants issued in 2019 exercised all of their
warrants on a cashless basis, during the three months ended
December 31, 2020. Due to the price protection features of these
warrants, the Company issued 374,500,000 warrant shares to these
warrant holders.
A
summary of the status of the Company’s outstanding common
stock warrants as of June 30, 2021 and changes during the fiscal
year ending on that date is as follows:
|
|
Number of
|
Weighted Average
|
|
|
Warrants
|
Exercise Price
|
|
Common
Stock Warrants
|
|
|
|
Balance
at beginning of year
|
500,000
|
$0.15
|
|
Granted
|
46,838,209
|
$0.011
|
|
Granted
due to repricing
|
347,761,534
|
0.0002
|
|
Exercised
|
(375,934,483)
|
0.0002
|
|
Forfeited
|
(7,000,000)
|
0.0002
|
|
Balance
at end of period
|
12,165,260
|
$0.011
|
|
|
|
|
|
Warrants
exercisable at end of period
|
12,165,260
|
$0.011
|
|
|
|
|
|
Weighted
average fair value of warrants granted due to repricing during the
period
|
|
$72,992
|
Derivative Liability
The
Company recognizes all derivative financial instruments on its
balance sheet at fair value.
Current and Future Impact of COVID-19
The COVID-19 pandemic continues to have a material negative impact
on capital markets. While we continue to incur operating losses, we
are currently dependent on debt or equity financing to fund our
operations and execute our business plan. We believe that the
impact on capital markets of COVID-19 may make it more costly and
more difficult for us to access these sources of
funding.
Off-Balance Sheet Arrangements
We have
no off-balance sheet arrangements.
Climate Change
Our
opinion is that neither climate change, nor governmental
regulations related to climate change, have had, or are expected to
have, any material effect on our operations.
Critical Accounting Policies
We have
identified the policies below as critical to our understanding of
the results of our business operations. We discuss the impact and
any associated risks related to these policies on our business
operations throughout Management’s Discussion and Analysis of
Financial Condition and Results of Operations where such policies
affect our reported and expected financial results.
In the
ordinary course of business, we have made a number of estimates and
assumptions in preparing our financial statements in conformity
with accounting principles generally accepted in the United States
of America (“GAAP”). Actual results could differ
significantly from those estimates and assumptions. The following
critical accounting policies are those that are most important to
the portrayal of our consolidated financial statements. For a
summary of our significant accounting policies, including the
critical accounting policies discussed below, refer to Note 2 -
“Summary of Significant Accounting Policies” included
in the notes to consolidated financial statements for the year
ended June 30, 2021 included elsewhere in this Annual Report on
Form 10-K.
We
consider the following accounting policies to be those most
important to the portrayal of our results of operations and
financial condition:
Revenue Recognition
We
recognize revenue in accordance with the Financial Accounting
Standards Board’s (“FASB”), Accounting Standards
Codification (“ASC”) ASC 606, Revenue from Contracts
with Customers (“ASC 606”). Revenues are recognized
when control is transferred to customers in amounts that reflect
the consideration the Company expects to be entitled to receive in
exchange for those goods. Revenue recognition is evaluated through
the following five steps: (i) identification of the contract, or
contracts, with a customer; (ii) identification of the performance
obligations in the contract; (iii) determination of the transaction
price; (iv) allocation of the transaction price to the performance
obligations in the contract; and (v) recognition of revenue when or
as a performance obligation is satisfied.
The
Company recognizes revenue when performance obligations under the
terms of a contract with the customer are satisfied. Product sales
occur once control is transferred upon delivery to the customer.
Revenue is measured as the amount of consideration the Company
expects to receive in exchange for transferring products. In the
event any discounts, sales incentives, or similar arrangements are
agreed to with a customer, such amounts are estimated at time of
sale and deducted from revenue. Sales taxes and other similar taxes
are excluded from revenue.
Convertible
Instruments - The Company evaluates and accounts for conversion
options embedded in its convertible instruments in accordance with
ASC 815.
ASC 815
generally provides three criteria that, if met, require companies
to bifurcate conversion options from their host instruments and
account for them as free standing derivative financial instruments
in accordance with EITF 00-19. These three criteria include
circumstances in which (a) the economic characteristics and risks
of the embedded derivative instrument are not clearly and closely
related to the economic characteristics and risks of the host
contract, (b) the hybrid instrument that embodies both the embedded
derivative instrument and the host contract is not re-measured at
fair value under otherwise applicable generally accepted accounting
principles with changes in fair value reported in earnings as they
occur and (c) a separate instrument with the same terms as the
embedded derivative instrument would be considered a derivative
instrument subject to the requirements of ASC 815. ASC 815 also
provides an exception to this rule when the host instrument is
deemed to be conventional (as that term is described).
The
Company accounts for convertible instruments (when it has
determined that the embedded conversion options should not be
bifurcated from their host instruments) in accordance with the
provisions of ASC 470 20 “Debt with Conversion Options”
Accordingly, the Company records, when necessary, discounts to
convertible notes for the intrinsic value of conversion options
embedded in debt instruments based upon the differences between the
fair value of the underlying common stock at the commitment date of
the note transaction and the effective conversion price embedded in
the note. Debt discounts under these arrangements are amortized
over the term of the related debt to their earliest date of
redemption. The Company also records when necessary deemed
dividends for the intrinsic value of conversion options embedded in
preferred shares based upon the differences between the fair value
of the underlying common stock at the commitment date of the note
transaction and the effective conversion price embedded in the
note.
The
Company believes the certain conversion features embedded in
convertible notes payable are not clearly and closely related to
the economic characteristics of the Company’s stock price.
Accordingly, the Company has recognized derivative liabilities in
connection with such instruments. The Company uses judgment in
determining the fair value of derivative liabilities at the date of
issuance at every balance sheet thereafter. The Company uses
judgment in determining which valuation is most appropriate for the
instrument (e.g., Cox, Ross & Rubinstein Binomial Tree
valuation model), the expected volatility, the implied risk-free
interest rate, as well as the expected dividend rate.
Share-Based
Compensation
We
compute share based payments in accordance with the provisions of
ASC Topic 718,
Compensation
– Stock Compensation
and related interpretations. As
such, compensation cost is measured on the date of grant at the
fair value of the share-based payments. Such compensation amounts,
if any, are amortized over the respective vesting periods of the
grants.
Restricted
stock awards are granted at the discretion of the compensation
committee of our board of directors (the “Board of
Directors”). These awards are restricted as to the transfer
of ownership and generally vest over the requisite service periods
(vesting on a straight–line basis). The fair value of a stock
award is equal to the fair market value of a share of our common
stock on the grant date.
We
estimate the fair value of stock options and warrants by using the
Cox, Ross & Rubinstein Binomial Tree model. The Cox, Ross &
Rubinstein valuation model requires the development of assumptions
that are inputs into the model. These assumptions are the expected
stock volatility, the risk–free interest rate, the expected
life of the option, the dividend yield on the underlying stock and
the expected forfeiture rate. Expected volatility is calculated
based on the historical volatility of our common stock over the
expected term of the option. Risk–free interest rates are
calculated based on continuously compounded risk–free rates
for the appropriate term.
Determining
the appropriate fair value model and calculating the fair value of
equity–based payment awards requires the input of the
subjective assumptions described above. The assumptions used in
calculating the fair value of equity–based payment awards
represent management’s best estimates, which involve inherent
uncertainties and the application of management’s judgment.
We are required to estimate the expected forfeiture rate and
recognize expense only for those shares expected to
vest.
We
account for share–based payments granted to
non–employees in accordance with ASC 505–50,
“Equity Based Payments to Non–Employees.” We
determine the fair value of the stock–based payment as either
the fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more readily
determinable. If the fair value of the equity instruments issued is
used, it is measured using the stock price and other measurement
assumptions as of the earlier of either (1) the date at which a
commitment for performance by the counterparty to earn the equity
instruments is reached, or (2) the date at which the
counterparty’s performance is complete.
Derivative
Instruments
We
enter into financing arrangements that consist of freestanding
derivative instruments or are hybrid instruments that contain
embedded derivative features. We recognize derivative instruments
as either assets or liabilities in the balance sheet and measure
such derivative instruments at fair values with gains or losses
recognized in earnings. Embedded derivatives that are not clearly
and closely related to the host contract are bifurcated and are
recognized at fair value with changes in fair value recognized as
either a gain or loss in earnings. The fair values of derivative
financial instruments are estimated using various techniques (and
combinations thereof) that are considered consistent with the
objective measuring fair values. In selecting the appropriate
technique, the nature of the instrument, the market risks that it
embodies and the expected means of settlement are considered.
Estimating fair values of derivative financial instruments requires
the development of significant and subjective estimates that may,
and are likely to, change over the duration of the instrument with
related changes in internal and external market factors. In
addition, option-based techniques (such as the Cox, Ross &
Rubinstein model) are highly volatile and sensitive to changes in
the trading market price of our common stock. Since derivative
financial instruments are initially and subsequently carried at
fair values, our income (expense) going forward will reflect the
volatility in these estimates and assumption changes.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.
Not
applicable.
Item 8. Financial Statements and Supplementary Data.
The
information required by this item is included in Item 15 of this
Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our
management, with the participation of our Chief Executive Officer,
who at June 30, 2021 was also our principal executive and financial
officer, has evaluated the effectiveness of our disclosure controls
and procedures as defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended, or the Exchange Act. Based upon
that evaluation, our Chief Executive Officer concluded that, as of
June 30, 2021, our disclosure controls and procedures were not
effective in ensuring that material information required to be
disclosed in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, including
ensuring that such material information is accumulated and
communicated to our Chief Executive Officer to allow timely
decisions regarding required disclosure.
Our
management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule
13a-15(f) under the Exchange Act. Our management assessed the
effectiveness of our internal control over financial reporting as
of June 30, 2021. In making this assessment, our management used
criteria issued by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control Over Financial Reporting
– Guidance for Smaller Public Companies.
During
our assessment of the design and the effectiveness of internal
control over financial reporting as of June 30, 2021, management
identified the following material weaknesses:
|
|
●
|
While
we have processes in place, there are no formal written policies
and procedures related to certain financial reporting
processes;
|
|
|
|
|
|
|
●
|
There
is no formal documentation in which management specified financial
reporting objectives to enable the identification of risks,
including fraud risks; and
|
|
|
|
|
|
|
●
|
Our
Board of Directors consists of four members, however we lack the
resources and personnel to implement proper segregation of duties
or other risk mitigation systems.
|
A
material weakness is “a significant deficiency, or a
combination of significant deficiencies, that result in more than a
remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected by
us in a timely manner.” A significant deficiency is a
deficiency or a combination of deficiencies, in internal control
over financial reporting that is less severe than a material
weakness, yet important enough to merit attention by those
responsible for oversight of the registrant’s financial
reporting.
We
intend to gradually improve our internal control over financial
reporting to the extent that we can allocate resources to such
improvements. We intend to prioritize the design of our internal
control over financial reporting starting with our control
environment and risk assessments and ending with control
activities, information and communication activities, and
monitoring activities. Although we believe the time to adapt in the
next year will help position us to provide improved internal
control functions into the future, in the interim, these changes
caused control deficiencies, which in the aggregate resulted in a
material weakness. Due to the existence of these material
weaknesses, our management, including our Chief Executive Officer,
concluded that our internal control over financial reporting was
not effective as of June 30, 2021.
This
annual report does not include an attestation report of the
Company’s independent registered public accounting firm
regarding internal control over financial reporting.
Management’s report was not subject to attestation by the
Company’s independent registered public accounting firm
pursuant to the rules of the SEC that permit smaller reporting
companies to provide only the management’s report in this
annual report.
Changes in Internal Control over Financial Reporting
There
was no change in our internal control over financial reporting
during the fiscal quarter ended June 30, 2021, that has materially
affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate
Governance.
The
following table sets forth the names, ages and principal position
of our executive officers and directors as of June 30,
2021:
|
Name
|
|
Age
|
|
Position
|
|
Mark
Lucky
|
|
62
|
|
Chairman
of the Board, Chief Executive Office, Chief Financial
Officer
|
|
Thomas
Grbelja (1)(2)
|
|
62
|
|
Director
|
|
Emmanuel
Esaka, MD
|
|
48
|
|
Director
|
|
Paul
Favata (1)(2)
|
|
56
|
|
Director
|
(1)
Member of the Compensation Committee
(2)
Member of the Audit Committee
Mr. Mark Lucky
has served as the Company’s Chief
Executive Officer, Treasurer, Secretary, and Chairman of the
Company’s Board of Directors since February 2019. Mr. Lucky
has been a certified public accountant and has more than 15 years
of experience serving as a public company chief financial officer.
His professional experience includes working with start-ups,
development-stage and mature companies in a wide variety of
industries. From May 2014 until February 2019 Mr. Lucky has worked
as a consultant to various public and private companies, including
Visium Technologies, Inc., Intelligent Living America, Inc. (OTCBB:
ILIV), and Ronn Motor Group, Inc. Prior to that, Mr. Lucky served
as the CFO for IceWeb Inc. (OTCBB: IWEB) from March 2007 to May
2014. From 2004 to 2005 he served as Vice President of Finance and
Administration at Galt Associates, Inc., a Sterling, Virginia
informatics/ technology and medical research services company and
from 2001 to 2004 he was Vice President of Finance and
Administration of MindShare Design, Inc., a San Francisco,
California based internet technology company. During his career Mr.
Lucky has also been employed by Axys Pharmaceuticals, Inc (NASDAQ:
AXPH) a San Francisco, California-based early stage drug discovery
biotech company, PriceWaterhouseCoopers, LLC, COMPASS Management
and Leasing, Inc., Mindscape, Inc., The Walt Disney Company and
KPMG. Mr. Lucky formerly served as a member of the board of
directors of Intelligent Living America, Inc., VOIS Inc. and HASCO
Medical, Inc. Mr. Lucky received a B.A. degree in Economics from
the University of California, Los Angeles.
We
believe that Mr. Lucky’s extensive senior management and
operational experience brings valuable knowledge to our board of
directors and that these experiences, qualifications, and
attributes have led to our conclusion that Mr. Lucky should be
serving as a member of our board of directors.
Mr. Thomas Grbelja
previously served as a director of
Realbiz Media Group, Inc. (OTCBB: RBIZ), and served as their Chief
Financial Officer from June 19, 2015 to January 2, 2017. Mr.
Grbelja has spent over 30 years as a Certified Public Accountant
providing a wide variety of professional accounting, tax and
financial consulting services to professional service,
manufacturing, and construction industry participants. Since 1990
he has served as the President and a Founding Member of Burke
Grbelja & Symeonides, LLC, Certified Public Accountants, an
accounting firm based in Rochelle Park, New Jersey. In addition,
between 1983 and 1990, Mr. Grbelja worked as an accountant at
Coopers & Lybrand, where he was responsible for the overall
audit engagement, including filings with the SEC, for certain
large, publicly traded companies. He received his undergraduate
degree in accounting at Fairleigh Dickinson University and is a
Certified Public Accountant.
Based
on his business experience the Company believes that Mr. Grbelja is
well-qualified to serve on the Company’s Board of
Directors.
Mr. Paul Favata
is a 29-year Wall Street veteran who began
his career on the American Stock Exchange (AMEX), working for two
smaller member firms, before moving to the New York Stock Exchange
(NYSE). After five years with one of the largest specialist firms
on the floor, Mr. Favata left the exchange in 1992 to work on the
sell-side. Mr. Favata spent the bulk of the 1990’s with a
small boutique firm working in both the retail and institutional
sales areas. Mr. Favata held the position of Senior Vice President
of Finance at a small, privately held consulting firm that advised
clients on acquisitions and long-term financing strategies. Since
2008, Mr. Favata has held various C-level executive positions
including as Chief Financial Officer of a $60 million annual
revenue telecom provider having management oversight and
responsibility for all financial functions while overseeing all
revenues, costs, capital expenditures, investments, and debt. Most
recently, President of a publicly traded company specializing in
the acquisition and integration of IT and Cloud Technology service
providers and Internet and web technologies. Mr. Favata resides,
with his family, in Saint Petersburg, Florida.
We
believe that Mr. Favata’s extensive senior management and
operational experience brings valuable knowledge to our board of
directors and that these experiences, qualifications, and
attributes have led to our conclusion that Mr. Favata should be
serving as a member of our board of directors.
Dr. Emmanuel Esaka.
Dr. Esaka brings decades of experience
as a successful surgeon. He has earned an MBA from Auburn
University, and graduated Cum Laude with Highest Honors from
Università Degli Studi di Bologna, Italy School of Medicine
and Surgery. He is the Founder, Owner, and CEO of Advanced Care
Obstetrics and Gynecology PA in Wilmington, Delaware, Co-Founder
and Managing Director of 3N Pharma USA, Inc., Founder and CEO of
Cameroon American Health System, Inc., and Co-Founder of Caritas
Home Health Services, Inc. Dr. Osaka also served as attending
obstetrics and gynecology at Irwin Army Community Hospital, and
serves as a Director of Meiger Health, Inc.
We
believe that Dr. Esaka’s extensive experience and business
background adds valuable knowledge to our board of directors and
that these experiences, qualifications, and attributes have led to
our conclusion that Dr. Esaka should be serving as a member of our
board of directors.
There
are no family relationships among our directors or executive
officers.
Corporate Governance
Directors are elected at the annual stockholder meeting or
appointed by our Board of Directors and serve for one year or until
their successors are elected and qualified. When a new director is
appointed to fill a vacancy created by an increase in the number of
directors, that director holds office until the next election of
one or more directors by stockholders. Officers are appointed by
our Board of Directors and their terms of office are at the
discretion of our Board of Directors.
Director Compensation
We compensate the Directors with stock as compensation for board
services.
Committees of the Board of Directors
Our
Board of Directors has established an Audit Committee, and a
Compensation Committee, and meet as a whole to fulfill the
functions of the Nominating Committee.
Audit Committee
. Mr. Favata and Mr. Grbelja are members of
the Audit Committee. The Audit Committee of our Board of Directors
was formed to assist the Board of Directors in fulfilling its
oversight responsibilities for the integrity of our consolidated
financial statements, compliance with legal and regulatory
requirements, the independent registered public accounting
firm’s qualifications and independence, and the performance
of our internal audit function and independent auditors. The Audit
Committee will also prepare the report that SEC rules require be
included in our annual proxy statement. The Audit Committee has
adopted a charter which sets forth the parameters of its authority
The Audit Committee Charter provides that the Audit Committee is
empowered to:
|
|
●
|
Appoint,
compensate, and oversee the work of the independent registered
public accounting firm employed by our company to conduct the
annual audit. This firm will report directly to the audit
committee;
|
|
|
|
|
|
|
●
|
Resolve
any disagreements between management and the auditor regarding
financial reporting;
|
|
|
|
|
|
|
●
|
Pre-approve
all auditing and permitted non-audit services performed by our
external audit firm;
|
|
|
|
|
|
|
●
|
Retain
independent counsel, accountants, or others to advise the committee
or assist in the conduct of an investigation;
|
|
|
|
|
|
|
●
|
Seek
any information it requires from employees - all of whom are
directed to cooperate with the committee’s requests - or
external parties;
|
|
|
|
|
|
|
●
|
Meet
with our officers, external auditors, or outside counsel, as
necessary; and
|
|
|
|
|
|
|
●
|
The
committee may delegate authority to subcommittees, including the
authority to pre-approve all auditing and permitted non-audit
services, provided that such decisions are presented to the full
committee at its next scheduled meeting.
|
Each
Audit Committee member is required to:
|
|
●
|
satisfy
the independence requirements of Section 10A(m)(3) of the
Securities Exchange Act of 1934, and all rules and regulations
promulgated by the SEC as well as the rules imposed by the stock
exchange or other marketplace on which our securities may be listed
from time to time, and
|
|
|
|
|
|
|
●
|
meet
the definitions of “non-employee director” for purposes
of SEC Rule 16b-3 and “outside director” for purposes
of Section 162(m) of the Internal Revenue Code.
|
Each
committee member is required to be financially literate and at
least one member is to be designated as the “financial
expert,” as defined by applicable legislation and regulation.
No committee member is permitted to simultaneously serve on the
audit committees of more than two other public companies. As we
expand our Board of Directors with additional independent directors
the number of directors serving on the Audit Committee will also
increase.
A copy
of the Audit Committee Charter is available on our website at
www.visiumtechnologies.com under “Investor
Relations”.
Compensation Committee
. Mr. Favata and Mr. Grbelja are
members of the Compensation Committee. The Compensation Committee
was appointed by the Board to discharge the Board’s
responsibilities relating to:
|
|
●
|
compensation
of our executives,
|
|
|
|
|
|
|
●
|
equity-based
compensation plans, including, without limitation, stock option and
restricted stock plans, in which officers or employees may
participate and
|
|
|
|
|
|
|
●
|
arrangements
with executive officers relating to their employment relationships
with our company, including employment agreements, severance
agreements, supplemental pension, or savings arrangements, change
in control agreements and restrictive covenants.
|
The
Compensation Committee has adopted a charter. The Compensation
Committee charter provides that the Compensation Committee has
overall responsibility for approving and evaluating executive
officer compensation plans, policies, and programs of our company,
as well as all equity-based compensation plans and policies. In
addition, the Compensation Committee oversees, reviews, and
approves all of our ERISA and other employee benefit plans which we
may establish from time to time. The Compensation Committee is also
responsible for producing an annual report on executive
compensation for inclusion in our proxy statement and assisting in
the preparation of certain information to be included in other
periodic reports filed with the SEC.
Each
Compensation Committee member is required to:
|
|
●
|
satisfy
the independence requirements of Section 10A(m)(3) of the
Securities Exchange Act of 1934, and all rules and regulations
promulgated by the SEC as well as the rules imposed by the stock
exchange or other marketplace on which our securities may be listed
from time to time, and
|
|
|
|
|
|
|
●
|
meet
the definitions of “non-employee director” for purposes
of SEC Rule 16b-3 and “outside director” for purposes
of Section 162(m) of the Internal Revenue Code.
|
Compliance with Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than ten percent of a
registered class of our equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Such persons are required by SEC regulations to furnish
us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on our review of the copies of such
reports furnished to us and written representations that no other
reports were required to be filed during fiscal 2020, we believe
that for fiscal 2021, all required reports were filed on a timely
basis under Section 16(a), except for Dr Esaka, who had not yet
filed his initial Form 3 or subsequent Form 4 and Form
5.
Code of Ethics
We have
adopted a Code of Ethics and Business Conduct to provide guiding
principles to our principal executive officer, principal financial
officer, and principal accounting officer or controller of our
company in the performance of their duties. Our Code of Ethics and
Business Conduct also strongly recommends that all directors and
employees of our company comply with the code in the performance of
their duties. Our Code of Ethics and Business Conduct provides that
the basic principle that governs all of our officers, directors and
employees is that our business should be carried on with loyalty to
the interest of our stockholders, customers, suppliers, fellow
employees, strategic partners and other business associates. We
believe that the philosophy and operating style of our management
are essential to the establishment of a proper corporate
environment for the conduct of our business.
Generally, our Code
of Ethics and Business Conduct provides guidelines
regarding:
|
|
●
|
conflicts
of interest,
|
|
|
|
|
|
|
●
|
financial
reporting responsibilities,
|
|
|
|
|
|
|
●
|
insider
trading,
|
|
|
|
|
|
|
●
|
inappropriate
and irregular conduct,
|
|
|
|
|
|
|
●
|
political
contributions, and
|
|
|
|
|
|
|
●
|
compliance
with laws.
|
Item 11. Executive Compensation.
The
following table sets forth, for the last two completed fiscal
years, all compensation paid, distributed or accrued for services
rendered to us by (i) all individuals serving as our principal
executive officer or acting in a similar capacity during the last
completed fiscal year, regardless of compensation level; (ii) our
two most highly compensated executive officers other than the
principal executive officer who were serving as executive officers
at the end of the last completed fiscal year and whose total
compensation exceeded $100,000; and (iii) up to two additional
individuals for whom disclosure would have been provided pursuant
to (ii) above but for the fact that the individual was not serving
as our executive officer at the end of the last completed fiscal
year:
Summary Compensation Table
|
Name and Principal Position
|
|
Year
|
|
Salary ($)(1)
|
|
|
Bonus ($)
|
|
|
Stock Awards ($)
|
|
|
Option Awards ($)
|
|
|
Non-Equity Incentive Plan Compensation ($)
|
|
|
Non-Qualified Deferred Compensation Earnings ($)
|
|
|
All Other Compensation ($)
|
|
|
Total ($)
|
|
||||||||
|
Mark
Lucky
(1)
|
|
2021
|
|
|
374,000
|
|
|
|
-
|
|
|
|
1,906,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,280,000
|
|
|
Chief
Executive Officer and Chief Financial Officer
|
|
2020
|
|
|
336,000
|
|
|
|
-
|
|
|
|
87,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
423,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts
includes accrued compensation for Mr. Lucky. Actual amounts paid to
Mr. Lucky were $354,000 and $0 for 2021 and 2020,
respectively.
|
Employment Agreements
Currently
no employees are party to any employment agreement with the
Company. We anticipate that as we complete certain acquisition
transactions, the Company will enter into employment agreements
with key executives.
Pension, Retirement or Similar Benefit Plans
There
are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers.
Our directors and executive officers may receive stock options at
the discretion of our Board in the future.
Outstanding Equity Awards at Fiscal Year-End
The
following table provides information concerning equity incentive
plan awards for each named executive officer outstanding as of June
30, 2021:
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCK AWARDS
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
||||
|
|
|
|
Equity
|
Incentive
|
|||||||||||||
|
|
|
|
Incentive
|
Plan
|
|||||||||||||
|
|
|
Market
|
Plan
|
Awards:
|
|||||||||||||
|
|
Number
|
Value
|
Awards:
|
Market
|
|||||||||||||
|
|
of
|
of
|
Number
|
or Payout
|
|||||||||||||
|
|
Shares
|
Shares
|
of
|
Value of
|
|||||||||||||
|
|
or
|
or
|
Unearned
|
Unearned
|
|||||||||||||
|
|
Units
|
Units
|
Shares,
|
Shares,
|
|||||||||||||
|
|
of
|
of
|
Units or
|
Units or
|
|||||||||||||
|
|
Stock
|
Stock
|
Other
|
Other
|
|||||||||||||
|
|
That
|
That
|
Rights
|
Rights
|
|||||||||||||
|
|
Have
|
Have
|
That
|
That
|
|||||||||||||
|
|
Not
|
Not
|
Have Not
|
Have Not
|
|||||||||||||
|
|
Vested
|
Vested
|
Vested
|
Vested
|
|||||||||||||
|
Name
|
(#)
|
($)
|
(#)
|
(#)
|
|||||||||||||
|
(a)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Mark Lucky
|
|
|
|
60,000,000
|
|
|
$
|
360,000
|
|
|
|
-
|
|
|
|
-
|
|
Director Compensation
Our
Board of Directors is comprised of Mr. Paul Favata, Mr. Tom
Grbelja, Dr. Emmanuel Esaka, and Mr. Mark Lucky, who is also an
executive officer of our company. In March 2021 Messrs. Favata and
Grbelja each received restricted stock grants as compensation for
their Board services.
The
following table sets forth the restricted stock grants issued to
Messrs. Favata, Grbelja, and Dr. Esaka as compensation for their
Board service:
|
|
|
FY2021
|
|
|
FY2020
|
|
||||||||||
|
|
|
Common Shares
|
|
|
|
|
|
Common Shares
|
|
|
|
|
||||
|
Name
|
|
Granted/Vested
|
|
|
Expense
|
|
|
Granted/Vested
|
|
|
Expense
|
|
||||
|
Tom
Grbelja
|
|
|
76,000,000
|
|
|
$
|
857,000
|
|
|
|
58,000,000
|
|
|
$
|
43,000
|
|
|
Paul
Favata
|
|
|
2,000,000
|
|
|
|
23,000
|
|
|
|
20,000,000
|
|
|
|
6,000
|
|
|
Emmanuel
Esaka
|
|
|
2,000,000
|
|
|
|
23,000
|
|
|
|
40,000,000
|
|
|
|
12,000
|
|
|
|
|
|
80,000,000
|
|
|
$
|
903,000
|
|
|
|
118,000,000
|
|
|
$
|
61,000
|
|
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholders Matters.
At
September 30, 2021, we had 3,512,404,577 shares of our Common Stock
outstanding. The following table sets forth information regarding
the beneficial ownership of our Common Stock as of September 30,
2021, 2020 by:
|
●
|
each
person known by us to be the beneficial owner of more than 5% of
our Common Stock;
|
|
●
|
our
director;
|
|
●
|
each of
our executive officers named in the compensation tables in Item 11;
and
|
|
●
|
all of
our executive officers and director as a group.
|
|
Amount and Nature of Beneficial Ownership
|
||||||||||||||||||||
|
|
|
COMMON STOCK
|
|
|
Series AA Preferred Stock Ownership
|
|
|
|
|
|||||||||||
|
|
|
AMOUNT OF
|
|
|
|
|
|
AMOUNT OF
|
|
|
|
|
|
% OF
VOTING
|
|
|||||
|
|
|
BENEFICIAL
|
|
|
% OF
|
|
|
BENEFICIAL
|
|
|
% OF
|
|
|
CONTROL
|
|
|||||
|
NAME
|
|
OWNERSHIP
|
|
|
CLASS
|
|
|
OWNERSHIP
|
|
|
CLASS
|
|
|
(1)
|
|
|||||
|
Mark
Lucky
|
|
|
419,622,464
|
|
|
|
11.57
|
%
|
|
|
1
|
|
|
|
100
|
%
|
|
|
57.18
|
%
|
|
Tom
Grbelja
|
|
|
147,969,860
|
|
|
|
4.08
|
%
|
|
|
|
|
|
|
|
|
|
|
2.10
|
%
|
|
Emmanuel
Esaka
|
|
|
99,672,438
|
|
|
|
2.75
|
%
|
|
|
|
|
|
|
|
|
|
|
1.38
|
%
|
|
Paul
Favata
|
|
|
28,833,334
|
|
|
|
0.79
|
%
|
|
|
|
|
|
|
|
|
|
|
0.42
|
%
|
|
Officers
and directors as a group
|
|
|
696,098,096
|
|
|
|
19.19
|
%
|
|
|
1
|
|
|
|
100
|
%
|
|
|
61.08
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
696,098,096
|
|
|
|
19.19
|
%
|
|
|
1
|
|
|
|
100
|
%
|
|
|
61.08
|
%
|
|
(1)
|
Percent of Voting Control is based upon the number of outstanding
shares of our common stock and our Series AA Preferred Stock as of
September 30, 2021, 2020. On that date, we had 3,512,404,577
outstanding shares of common stock with one vote per share, and 1
share of Series AA Preferred Stock outstanding with voting rights
equal to 51% of the outstanding common shares.
|
The
following table sets forth securities authorized for issuance under
any equity compensation plans approved by our stockholders as well
as any equity compensation plans not approved by our stockholder as
of June 30, 2021.
|
Plan category
|
|
Number of securities to be issued upon exercise of outstanding
options, warrants and rights (a)
|
|
|
Weighted-average exercise price of outstanding options, warrants
and rights (b)
|
|
|
Number of securities remaining available for future issuance under
equity compensation plans (excluding securities reflected in column
(a)) (c)
|
|
|||
|
Equity
compensation plans approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
Employee Stock Compensation Plan
|
|
|
16,000,000
|
|
|
$
|
0.015
|
|
|
|
104,000,000
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
|
16,000,000
|
|
|
$
|
0.015
|
|
|
|
104,000,000
|
|
Item 13. Certain Relationship and Related Party Transactions, and
Director Independence.
Other
than compensation arrangements, we describe below, transactions
during our last fiscal year, to which we were a party, in
which:
|
|
●
|
The
amounts involved exceeded or will exceed the lesser of $120,000 or
1% of the average of our total assets at year-end for the last two
completed fiscal years; and
|
|
|
|
|
|
|
●
|
Any of
our directors, executive officers, or holders of more than 5% of
our common stock, or any member of the immediate family of the
foregoing persons, had or will have a direct or indirect material
interest.
|
Common Stock
Issuances of Common Stock During Fiscal 2021
During
fiscal 2021 we issued shares of our common stock as
follows:
Convertible Notes Payable
During
the year ended June 30, 2021 the Company issued 524,543,160 shares
of its common stock related to the conversion of $188,460 of
principal and accrued interest of its convertible notes payable, at
an average contract conversion price of $0.00037 per share. The
fair value of the shares issued was $2,422,722.
Sale of Restricted Common Stock
During
the year ended June 30, 2021, the Company issued 225,000,000
commitment shares related to convertible note transactions, with 4
investors.
Stock Based Compensation
During
the year ended June 30, 2021 the Company issued 220,000,000 shares
of its $0.0001 par value common stock as compensation to its
directors and officers. The shares were valued at $2,809,000, or
$0.013 per share, based on the share price at the time of the
transactions.
During
the year ended June 30, 2021 the Company issued and vested
56,666,669 shares of its $0.0001 par value common stock to three
consultants, as compensation under three separate consulting
agreements. The shares were valued at $354,000, or $0.001 per
share, based on the share price at the time of the
transactions.
Issuances of Common Stock During 2020
During
fiscal 2020 we issued shares of our common stock as
follows:
Convertible Notes Payable
During
the year ended June 30, 2020 the Company issued 954,210,518 shares
of its common stock related to the conversion of $333,219 of
principal and accrued interest of its convertible notes payable, at
an average contract conversion price of $0.0003 per share. The fair
value of the shares issued was $1,059,572, resulting in a loss on
debt settlement of $593,907.
Sale of Restricted Common Stock
None.
Stock Based Compensation
During
the year ended June 30, 2020 the Company issued 348,000,000 shares
of its $0.0001 par value common stock as compensation to its
directors and officers. The shares were valued at $148,000, or
$0.00043 per share, based on the share price at the time of the
transactions.
During
the year ended June 30, 2020 the Company issued and vested
199,850,000 shares of its $0.0001 par value common stock to four
consultants, as compensation under four separate consulting
agreements. The shares were valued at $198,735, or $0.001 per
share, based on the share price at the time of the
transactions.
Director Independence
Although
our common stock is not listed on any national securities exchange,
for purposes of independence we use the definition of independence
applied by The Nasdaq Stock Market. The Board has determined that
each of Paul Favata, Tom Grbelja, and Dr. Emmanuel Esaka are
“independent” in accordance with such
definition.
Item 14. Principal Accountant Fees and Services
During
the two most recent fiscal years and through the Engagement Date,
neither the Company, nor any one on its behalf, consulted with
Assurance Dimensions, Inc. in regard to the application of
accounting principles to any specified transaction, either
completed or proposed, or the type of audit opinion that might be
rendered on the Company’s financial statements, or any other
matters or reportable events as defined in Item 304(a)(2)(i) and
(ii) of Regulation S-K.
The
following table summarizes the fees of Assurance Dimensions, Inc.,
our independent registered public accounting firm billed for each
of the last two fiscal years for audit services and other
services:
|
Fee Category
|
|
2021
|
|
|
2020
|
|
||
|
Audit
Related Fees Paid to Assurance Dimensions, Inc. (1)
|
|
$
|
35,500
|
|
|
$
|
30,000
|
|
|
Tax
Fees (2)
|
|
|
-
|
|
|
|
-
|
|
|
All
Other Fees
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Fees
|
|
$
|
35,500
|
|
|
$
|
30,000
|
|
(1)
Consists of fees for professional services rendered in connection
with the financial statements included in our Annual Report on Form
10-K and quarterly reports on Form 10-Q.
(2)
Consists of fees relating to any tax compliance and tax
planning.
PART IV
Item 15. Exhibits and Financial Statement Schedules
a.
Index to Financial Statements and Financial Statement
Schedules
Item 16. Form 10-K Summary.
Not Applicable.
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Page
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Report of Independent Registered Public Accounting
Firm
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F-2
|
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Consolidated Balance Sheets as of June 30, 2021 and
2020
|
F-3
|
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Consolidated Statements of Operations for each of the two years in
the period ended June 30, 2021
|
F-4
|
|
Consolidated Statements of Changes in Stockholders’ Deficit
for each of the two years in the period ended June 30,
2021
|
F-5
|
|
Consolidated Statements of Cash Flows for each of the two years in
the period ended June 30, 2021
|
F-6
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-7 -
F-21
|
All
other schedules for which provision is made in the applicable
accounting regulations of the SEC are not required under the
related instructions, or are inapplicable, and therefore have been
omitted.
b. Exhibits
|
Exhibit No.
|
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Description of Exhibit
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2.1
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2.2
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Agreement and Plan of Merger by and among Fittipaldi Logistics, Inc., State Petroleum Acquisition Corp. and State Petroleum Distributors, Inc. (30) |
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2.3
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2.4
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3.1
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3.2
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3.3
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3.4
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3.5
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3.6
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3.7
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3.8
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3.9
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3.10
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3.11
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3.12
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3.13
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3.14
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3.15
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3.16
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3.17
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3.18
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4.1
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4.2
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4.3
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4.4
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4.5
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4.6
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4.7
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4.8
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4.9
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4.10
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4.11
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4.12
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4.13
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4.14
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4.15
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4.16
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4.17
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4.18
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4.19
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4.20
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4.21
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4.22
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4.23
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4.24
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4.25
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4.26
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4.27
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4.28
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4.29
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4.30
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4.31
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4.32
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4.33
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4.34
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4.35
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4.36
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4.37
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4.38
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4.39
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4.40
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4.41
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4.42
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4.43
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4.44
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4.45
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4.46
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4.47
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4.48
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4.49
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4.50
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10.1
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10.2
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10.3
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10.4
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10.5
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10.6
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10.7
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10.8
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10.9
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10.10
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10.11
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10.12
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10.13
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10.14
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10.15
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10.16
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10.17
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10.18
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10.19
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10.20
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10.21
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10.22
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10.23
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10.24
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10.25
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10.26
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10.27
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|
Amendment
No. 1 to License Agreement,
dated May 7,
2020,
between The MITRE Corporation and Visium Analytics,
LLC (39)
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14.1
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21.1
|
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Subsidiaries of Registrant (20)*
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31.1
|
|
Section 302 Certificate of Chief Executive Officer.*
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31.2
|
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Section 302 Certificate of Principal Financial
Officer.*
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32.1
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*
|
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32.2
|
|
Certification of the Principal Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*
|
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101.INS
|
|
XBRL
Instance Document *
|
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101.SCH
|
|
XBRL
Taxonomy Extension Schema *
|
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101.CAL
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|
XBRL
Taxonomy Extension Calculation Linkbase *
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101.DEF
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|
XBRL
Taxonomy Extension Definition Linkbase *
|
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101.LAB
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|
XBRL
Taxonomy Extension Label Linkbase *
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101.PRE
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|
XBRL
Taxonomy Extension Presentation Linkbase *
|
*
Pursuant to Rule 406T of Regulation S-T, these interactive data
files are deemed “furnished” and not
“filed” or part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act
of 1933, or deemed “furnished” and not
“filed” for purposes of Section 18 of the Securities
and Exchange Act of 1934, and otherwise is not subject to liability
under these sections.
|
*
|
Filed
herewith.
|
|
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**
|
Furnished
herewith.
|
|
|
|
|
(1)
|
Incorporated
by reference to Current Report on Form 8-K filed on March 26,
2003.
|
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(2)
|
Incorporated
by reference to registration statement on Form 10-SB, as
amended.
|
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|
(3)
|
Incorporated
by reference to definitive Schedule 14C Information Statement filed
on February 2, 2001.
|
|
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|
(4)
|
Incorporated
by reference to definitive Schedule 14C Information Statement filed
on April 22, 2003.
|
|
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|
(5)
|
Incorporated
by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 2002.
|
|
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|
|
(6)
|
Incorporated
by reference to Current Report on Form 8-K filed on July 8,
2004.
|
|
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|
|
(7)
|
Incorporated
by reference to Current Report on Form 8-K filed on January 3,
2002.
|
|
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|
(8)
|
Incorporated
by reference to Quarterly Report on Form 10-QSB for the period
ended March 31, 2003.
|
|
|
|
|
(9)
|
Incorporated
by reference to Preliminary Information Statement on Schedule 14C
filed on July 8, 2004.
|
|
|
|
|
(10)
|
Incorporated
by reference to registration statement on Form SB-2, SEC File No.
333-118792, filed on September 3, 2004.
|
|
|
|
|
(11)
|
Incorporated
by reference to Amendment No. 1 to registration statement the Form
SB-2, SEC File No. 333-118792, filed on October 20,
2004.
|
|
|
|
|
(12)
|
Incorporated
by reference to Amendment No. 3 to the registration statement on
Form SB-2, SEC File No. 333-118792, filed on December 15,
2004.
|
|
|
|
|
(13)
|
Incorporated
by reference to Quarterly Report on Form 10-QSB for the period
ended December 31, 2004 filed on February 14, 2005.
|
|
|
|
|
(14)
|
Incorporated
by reference to Current Report on Form 8-K/A filed on February 25,
2005.
|
|
|
|
|
(15)
|
Incorporated
by reference to Current Report on Form 8-K filed on March 25,
2005.
|
|
|
|
|
(16)
|
Incorporated
by reference to Current Report on Form 8-K filed on March 28,
2005.
|
|
|
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|
(17)
|
Incorporated
by reference to Quarterly Report on Form 10-QSB for the period
ended March 31, 2005.
|
|
|
|
|
(18)
|
Incorporated
by reference to Current Report on Form 8-K filed on June 3,
2005.
|
|
|
|
|
(19)
|
Incorporated
by reference to Current Report on Form 8-K filed on July 28,
2005.
|
|
|
|
|
(20)
|
Reserved
|
|
|
|
|
(21)
|
Incorporated
by reference to Current Report on Form 8-K filed on February 17,
2006.
|
|
|
|
|
(22)
|
Incorporated
by reference to Amendment No. 1 to registration statement the Form
SB-2, SEC File No. 333-131832 filed on May 5, 2006.
|
|
|
|
|
(23)
|
Incorporated
by reference to Annual Report on Form 10-K for the fiscal year
ended June 30, 2006 filed on October 13, 2006.
|
|
|
|
|
(24)
|
Incorporated
by reference to Current Report on Form 8-K filed on October 17,
2006.
|
|
|
|
|
(25)
|
Incorporated
by reference to Current Report on Form 8-K filed on October 24,
2006.
|
|
|
|
|
(26)
|
Incorporated
by reference to Current Report on Form 8-K filed on January 26,
2007.
|
|
|
|
|
(27)
|
Incorporated
by reference to Current Report on Form 8-K filed on April 30,
2007.
|
|
|
|
|
(28)
|
Incorporated
by reference to Current Report on Form 8-K filed on July 25,
2007.
|
|
|
|
|
(29)
|
Incorporated
by reference to Annual Report on Form 10-KSB filed on October 15,
2007.
|
|
|
|
|
(30)
|
Incorporated
by reference to Current Report on Form 8-K filed on November 15,
2007.
|
|
|
|
|
(31)
|
Incorporated
by reference to Current Report on Form 8-K filed on December 31,
2007.
|
|
|
|
|
(32)
|
Incorporated
by reference to Current Report on Form 8-K filed on March 25,
2008.
|
|
|
|
|
(33)
|
Incorporated
by reference to Current Report on Form 8-K filed on June 13,
2008.
|
|
|
|
|
(34)
|
Incorporated
by reference to Current Report on Form 8-K filed on October 16,
2008.
|
|
|
|
|
(35)
|
Incorporated
by reference to Registration Statement on Form 10-12G/A filed on
June 14, 2013.
|
|
|
|
|
(36)
|
Incorporated
by reference to Current Report on Form 8-K filed on July 27,
2019.
|
|
|
|
|
(37)
|
Incorporated
by reference to Current Report on Form 8-K filed on January 10,
2019.
|
|
|
|
|
(38)
|
Incorporated
by reference to Current Report on Form 8-K filed on January 16,
2019.
|
|
|
|
|
(39)
|
Incorporated
by reference to Exhibit 10.18 to Current Report on Form 8-K filed
on May 13, 2020
|
|
|
|
|
|
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
VISIUM TECHNOLOGIES, INC.
|
By:
|
/s/ Mark Lucky
|
|
|
|
Mark
Lucky
|
|
|
|
Chief
Executive Officer
|
|
Date:
October 13, 2021
Pursuant
to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates
indicated.
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Mark Lucky
|
|
Chief
Executive Officer and Chief Financial Officer
|
|
October
13, 2021
|
|
|
|
|
(principal
accounting officer)
|
|
|
TABLE OF CONTENTS
|
Report of Independent Registered Public Accounting
Firm
|
F-2
|
|
|
|
|
Financial
Statements:
|
|
|
|
|
|
Consolidated Balance Sheets
|
F-3
|
|
|
|
|
Consolidated Statements of Operations
|
F-4
|
|
|
|
|
Consolidated Statements of Changes in Stockholders’
Deficit
|
F-5
|
|
|
|
|
Consolidated Statements of Cash Flows
|
F-6
|
|
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-7 -
F-17
|
|
|
F-1
|
|
|
|
||
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of
Directors and
Stockholders
of Visium Technologies, Inc.
Opinion
on the Financial Statements
We have audited the
accompanying consolidated balance sheets of Visium Technologies,
Inc. (the Company) as of June 30, 2021 and 2020, and the related
consolidated statements of operations, stockholders’ deficit,
and cash flows for each of the years in the two-year period ended
June 30, 2021, and the related notes (collectively referred to as
the consolidated financial statements). In our opinion, the
consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of June 30, 2021
and 2020, and the results of its operations and its cash flows for
each of the years in the two-year period ended June 30, 2021, in
conformity with accounting principles generally accepted in the
United States of America.
Explanatory
Paragraph – Going Concern
The accompanying
consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has suffered recurring
losses for the year ended June 30, 2021. The Company had a net loss
of $3,373,459, had net cash used in operating activities of
$792,640, and had negative working capital of $2,837,187. These
factors raise substantial doubt about its ability to continue as a
going concern. Management’s plans in regard to these matters
are also described in Note 1. The consolidated financial statements
do not include any adjustments that might result from the outcome
of this uncertainty.
Basis
for Opinion
These financial
statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s consolidated financial statements based on our
audit. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our
audit in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. The
Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of
our audit, we are required to obtain an understanding of internal
control over financial reporting, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our audit
included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit
also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that
our audit provide a reasonable basis for our opinion.
Critical
Audit Matters
The critical audit
matters communicated below are matters arising from the current
period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
Extinguishment of Debt
Description of the Matter
In June 2021, the
Company obtained a legal opinion to extinguish aged debt totaling
$787,272 as detailed in Note 5. Each of the individual debt
instruments were determined to be beyond the statute of limitations
and it was determined that the Company has a complete defense to
liability related to this debt under the applicable statute of
limitations. Auditing the accuracy of the legal letter and
applicable statue of limitations was based on significant auditor
judgement.
How We Addressed the Matter in Our Audit
The primary
procedures we performed to address this critical audit matter
include the following: (i) obtaining the legal opinion supporting
the write-off of the liabilities; (ii) evaluating the expertise and
qualifications of the firm providing the legal opinion and
concluding that they have the necessary expertise to provide such
an opinion; (iii) substantiating the opinion by attempting to
confirming the specific debts written off either in current or
through past confirmation attempts (iv) reviewing the convertible
note agreements and verifying the dates of those debts that have
been written off and are in fact past the statute of limitations.
Based on these procedures and evidence obtained we concluded that
the debts were appropriately written off.
|
We have served as
the Company’s auditor since 2017.
|
|
|
|
|
|
Margate,
Florida
October 13,
2021
|
|
|
|
F-2
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
|
|
|
June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
125,166
|
|
|
$
|
30,251
|
|
|
Prepaid
license fee
|
|
|
55,418
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
180,584
|
|
|
|
30,251
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
180,584
|
|
|
$
|
30,251
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
425,804
|
|
|
$
|
333,805
|
|
|
Accrued
compensation
|
|
|
672,529
|
|
|
|
652,529
|
|
|
Accrued
interest
|
|
|
366,149
|
|
|
|
677,857
|
|
|
Convertible
notes payable to ASC Recap LLC
|
|
|
147,965
|
|
|
|
147,965
|
|
|
Convertible
notes payable, net of discount of $396,033 and $0,
respectively
|
|
|
809,195
|
|
|
|
852,965
|
|
|
Derivative
liability
|
|
|
184,381
|
|
|
|
438,553
|
|
|
Notes
payable, net of discount of $18,252 and $0,
respectively
|
|
|
411,748
|
|
|
|
205,000
|
|
|
Due to
officers
|
|
|
-
|
|
|
|
102,340
|
|
|
Total
current liabilities
|
|
|
3,017,771
|
|
|
|
3,411,011
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
|
|
|
|
|
|
|
Series
A Convertible Stock ($0.001 par value; 20,000,000 shares
authorized, 13,992,340 shares issued and outstanding as of June 30,
2021 and 2020, respectively)
|
|
|
13,992
|
|
|
|
13,992
|
|
|
Series
B Convertible Stock ($0.001 par value 30,000,000 shares authorized,
1,327,640 shares issued and outstanding as of June 30, 2021 and
2020, respectively)
|
|
|
1,328
|
|
|
|
1,328
|
|
|
Series
AA Convertible Stock ($0.001 par value; 1 share authorized, 1 share
issued and outstanding as of June 30, 2021 and 2020)
|
|
|
0
|
|
|
|
0
|
|
|
Common
stock, $0.0001 par value, 10,000,000,000 shares authorized:
3,098,271,081 shares issued and 2,946,271,108 outstanding at June
30, 2021, and 1,544,793,446 shares issued and 1,544,126,787
outstanding at June 30, 2020, respectively (See Note
6)
|
|
|
294,627
|
|
|
|
154,413
|
|
|
Additional
paid in capital
|
|
|
48,217,903
|
|
|
|
44,441,085
|
|
|
Accumulated
deficit
|
|
|
(51,365,037
|
)
|
|
|
(47,991,578
|
)
|
|
Total
stockholders’ deficit
|
|
|
(2,837,187
|
)
|
|
|
(3,380,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit
|
|
$
|
180,584
|
|
|
$
|
30,251
|
|
See
accompanying notes to consolidated financial
statements.
|
|
F-3
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
FOR THE YEAR ENDED
|
|
|||||
|
|
|
June 30, 2021
|
|
|
June 30, 2020
|
|
||
|
|
|
|
|
|
|
|
||
|
Revenues
|
|
$
|
25,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
|
3,879,158
|
|
|
|
917,993
|
|
|
Development
expense
|
|
|
258,168
|
|
|
|
35,500
|
|
|
Total
operating expenses
|
|
|
4,137,326
|
|
|
|
953,493
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(4,112,326
|
)
|
|
|
(953,493
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
Gain on
change in fair value of derivative liabilities
|
|
|
1,844,460
|
|
|
|
385,367
|
|
|
Derivative
liability expense
|
|
|
(1,059,282
|
)
|
|
|
(61,396
|
)
|
|
Interest
expense
|
|
|
(442,171
|
)
|
|
|
(323,021
|
)
|
|
Gain
(loss) on debt settlement
|
|
|
28,863
|
|
|
|
(593,907
|
)
|
|
Gain on
debt write off
|
|
|
578,408
|
|
|
|
-
|
|
|
Warrant
exercise expense
|
|
|
(211,411
|
)
|
|
|
-
|
|
|
Other
income
|
|
|
-
|
|
|
|
4,000
|
|
|
Total
other income (expense)
|
|
|
738,867
|
|
|
|
(588,957
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(3,373,459
|
)
|
|
$
|
(1,542,450
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
1,977,488,957
|
|
|
|
312,626,670
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss Per Common Share –Basic and Diluted:
|
|
$
|
(0.002
|
)
|
|
$
|
(0.005
|
)
|
See
accompanying notes to consolidated financial
statements.
|
|
F-4
|
|
|
|
||
VISIUM
TECHNOLOGIES, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE
YEARS ENDED JUNE 30, 2021 AND 2020
|
|
|
Preferred
|
|
|
Preferred
|
|
|
Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
Stock -
|
|
|
Stock -
|
|
|
Stock -
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
Series A
|
|
|
Series B
|
|
|
Series AA
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
$0.001
|
|
|
$0.001
|
|
|
$0.001
|
|
|
$0.0001
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|||||||||||||||||||||||
|
|
|
Par Value
|
|
|
Par Value
|
|
|
Par Value
|
|
|
Par Value
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|||||||||||||||||||||||
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|||||||||||
|
Balance at June 30, 2019
|
|
|
13,992,340
|
|
|
$
|
13,992
|
|
|
|
1,327,640
|
|
|
$
|
1,328
|
|
|
|
1
|
|
|
$
|
0
|
|
|
|
42,066,269
|
|
|
$
|
4,207
|
|
|
$
|
43,184,984
|
|
|
$
|
(46,449,128
|
)
|
|
$
|
(3,244,617
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued as compensation to directors and
officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348,000,000
|
|
|
|
34,800
|
|
|
|
113,200
|
|
|
|
|
|
|
|
148,000
|
|
|
Shares issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,850,000
|
|
|
|
19,985
|
|
|
|
178,750
|
|
|
|
|
|
|
|
198,735
|
|
|
Shares issued for conversion of notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
954,210,518
|
|
|
|
95,421
|
|
|
|
964,151
|
|
|
|
|
|
|
|
1,059,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,542,450
|
)
|
|
|
(1,542,450
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2020
|
|
|
13,992,340
|
|
|
$
|
13,992
|
|
|
|
1,327,670
|
|
|
$
|
1,328
|
|
|
|
1
|
|
|
$
|
0
|
|
|
|
1,544,126,787
|
|
|
$
|
154,413
|
|
|
$
|
44,441,085
|
|
|
$
|
(47,991,578
|
)
|
|
$
|
(3,380,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued as compensation to directors and
officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,000,000
|
|
|
|
22,000
|
|
|
|
2,787,000
|
|
|
|
|
|
|
|
2,809,000
|
|
|
Shares issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,666,669
|
|
|
|
5,667
|
|
|
|
348,333
|
|
|
|
|
|
|
|
354,000
|
|
|
Shares issued for conversion of notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
524,543,160
|
|
|
|
52,454
|
|
|
|
338,585
|
|
|
|
|
|
|
|
391,039
|
|
|
Commitment shares issued pursuant to financings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,000,000
|
|
|
|
22,500
|
|
|
|
110,529
|
|
|
|
|
|
|
|
133,029
|
|
|
Shares issued upon exercise of stock warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
375,934,483
|
|
|
|
37,593
|
|
|
|
173,818
|
|
|
|
|
|
|
|
211,411
|
|
|
Amortization of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,553
|
|
|
|
|
|
|
|
18,553
|
|
|
Net loss for the year ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,373,459
|
)
|
|
|
(3,373,459
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2021
|
|
|
13,992,340
|
|
|
$
|
13,992
|
|
|
|
1,327,670
|
|
|
$
|
1,328
|
|
|
|
1
|
|
|
$
|
0
|
|
|
|
2,946,271,099
|
|
|
$
|
294,627
|
|
|
$
|
48,217,903
|
|
|
$
|
(51,365,037
|
)
|
|
$
|
(2,837,187
|
)
|
See
accompanying notes to consolidated financial
statements.
|
|
F-5
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
FOR THE YEAR ENDED
|
||||||
|
|
|
June 30, 2021
|
|
|
|
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(3,373,459
|
)
|
|
$
|
(1,542,450
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Amortization
of debt discounts
|
|
305,499
|
|
|
|
206,249
|
|
|
Stock
based payments for consultants, directors, and
officers
|
|
3,163,000
|
|
|
|
346,735
|
|
|
(Gain)
loss on debt settlement/write-offs
|
|
(607,271
|
)
|
|
|
593,907
|
|
|
Gain on
change in fair value of derivative liabilities
|
|
(1,844,460
|
)
|
|
|
(385,367
|
)
|
|
Warrant
conversion expense
|
|
211,411
|
|
|
|
-
|
|
|
Derivative
liability expense
|
|
1,059,282
|
|
|
|
61,396
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
445,850
|
|
|
|
130,832
|
|
|
Accrued
compensation
|
|
20,000
|
|
|
|
336,000
|
|
|
Accrued
interest
|
|
96,007
|
|
|
|
145,941
|
|
|
Prepaid
license fee
|
|
(55,417
|
)
|
|
|
-
|
|
|
Discount
on notes payable
|
|
(213,082
|
)
|
|
|
-
|
|
|
Net
cash used in operating activities
|
|
(792,640
|
)
|
|
|
(106,757
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Advance
from officers
|
|
(102,340
|
)
|
|
|
40,340
|
|
|
Proceeds
from convertible notes payable
|
|
838,595
|
|
|
|
78,000
|
|
|
Proceeds
from short term notes payable
|
|
225,000
|
|
|
|
-
|
|
|
Repayment
of convertible notes
|
|
(73,700
|
)
|
|
|
-
|
|
|
Net
cash provided by financing activities
|
|
887,555
|
|
|
|
118,340
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash
|
|
94,915
|
|
|
|
11,583
|
|
|
|
|
|
|
|
|
|
|
|
Cash at
beginning of year
|
|
30,251
|
|
|
|
18,668
|
|
|
|
|
|
|
|
|
|
|
|
Cash at
end of year
|
$
|
125,166
|
|
|
$
|
30,251
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
|
|
|
|
Interest
|
$
|
39,755
|
|
|
$
|
-
|
|
|
Income
taxes
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for conversion of notes payable and accrued
interest (fair value of the shares issued - $2,227,062 and
$1,059,572, respectively
|
$
|
188,460
|
|
|
$
|
333,220
|
|
|
Change in fair value of derivative liability related
to debt conversions
|
$
|
-
|
|
|
$
|
92,444
|
|
|
Derivative
liability attributable to debt discount on new notes
payable
|
|
-
|
|
|
|
48,000
|
|
See
accompanying notes to consolidated financial
statements.
|
|
F-6
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 1: ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING
CONCERN
Visium
Technologies, Inc., or the Company, is a Florida corporation that
was originally incorporated in Nevada in October 1987. It was
formerly known as Jaguar Investments, Inc. between October 1987 and
May 2003, Power2Ship, Inc. between May 2003 and November 2006,
Fittipaldi Logistics, Inc. between November 2006 and December 2007,
and as NuState Energy Holdings, Inc. between December 2007 and
March 5, 2018 when it changed its name to Visium Technologies,
Inc.
The
Company is focused on digital risk management, cybersecurity, and
technology services for network physical security, the Cloud,
mobility solutions, and the Internet of Things
(“IOT”).
In
April 2021 the Company created JAJ Advisory, LLC, a Viriginia
limited liability company. The LLC was established to account for
non-cybersecurity related business activities that the Company may
pursue.
Going Concern
The
accompanying consolidated financial statements have been prepared
on a going concern basis. For the year ended June 30, 2021 we had a
net loss of $3,373,459, had net cash used in operating activities
of $792,640 and had negative working capital of $2,837,187. These
matters raise substantial doubt about the Company’s ability
to continue as a going concern for a period of one year from the
date of this filing. The Company’s ability to continue as a
going concern is dependent upon its ability to obtain the necessary
financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due, to fund
possible future acquisitions, and to generate profitable operations
in the future. Management plans to provide for the Company’s
capital requirements by continuing to issue additional equity and
debt securities. The outcome of these matters cannot be predicted
at this time and there are no assurances that, if achieved, the
Company will have sufficient funds to execute its business plan or
generate positive operating results. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The
preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reporting amounts of revenues and
expenses during the reported period. Actual results will differ
from those estimates. Included in these estimates are assumptions
used in Cox, Ross & Rubinstein Binomial Tree stock-based
compensation and derivative liabilities valuation methods, such as
expected volatility, risk-free interest rate, and expected dividend
rate and in the valuation allowance of deferred tax
assets.
Cash and Cash Equivalents
The
Company considers all highly liquid, temporary, cash equivalents or
investments with an original maturity of three months or less when
purchased, to be cash equivalents. The Company had no cash
equivalents during the years ended June 30, 2021 and
2020.
Concentration of Credit Risks
The
Company is subject to a concentration of credit risk from
cash.
The
Company’s cash account is held at a financial institution and
is insured by the Federal Deposit Insurance Corporation, or FDIC,
up to $250,000.
Derivative Liabilities
The
Company assessed the classification of its derivative financial
instruments as of June 30, 2021 and 2020, which consist of
convertible instruments and rights to shares of the Company’s
common stock and determined that such derivatives meet the criteria
for liability classification under ASC 815.
ASC 815
generally provides three criteria that, if met, require companies
to bifurcate conversion options from their host instruments and
account for them as free standing derivative financial instruments.
These three criteria include circumstances in which (a) the
economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to the economic
characteristics and risks of the host contract, (b) the hybrid
instrument that embodies both the embedded derivative instrument
and the host contract is not re-measured at fair value under
otherwise applicable generally accepted accounting principles with
changes in fair value reported in earnings as they occur and (c) a
separate instrument with the same terms as the embedded derivative
instrument would be considered a derivative instrument subject to
the requirements of ASC 815. ASC 815 also provides an exception to
this rule when the host instrument is deemed to be conventional, as
described.
|
|
F-8
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
continued
The
Company uses judgment in determining the fair value of derivative
liabilities at the date of issuance and at every balance sheet
thereafter and in determining which valuation method is most
appropriate for the instrument, the expected volatility, the
implied risk-free interest rate, as well as the expected dividend
rate, if any.
The Company
recorded a derivative liability as of June 30, 2021 of
$184,381.
Fair Value of Financial Instruments
The
Company accounts for assets and liabilities measured at fair value
on a recurring basis, in accordance with ASC Topic 820, Fair Value
Measurements and Disclosures, or ASC 820. ASC 820 establishes a
common definition for fair value to be applied to existing
generally accepted accounting principles that require the use of
fair value measurements, establishes a framework for measuring fair
value, and expands disclosure about such fair value
measurements.
ASC 820
defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Additionally,
ASC 820 requires the use of valuation techniques that maximize the
use of observable inputs and minimize the use of unobservable
inputs. These inputs are prioritized below:
|
Level
1:
|
Observable
inputs such as quoted market prices in active markets for identical
assets or liabilities.
|
|
|
|
|
Level
2:
|
Observable
market-based inputs or unobservable inputs that are corroborated by
market data.
|
|
|
|
|
Level
3:
|
Unobservable
inputs for which there is little or no market data, which require
the use of the reporting entity’s own
assumptions.
|
Additional Disclosures Regarding Fair Value
Measurements
The
carrying value of cash, accounts payable and accrued expenses,
accrued compensation, notes payable and convertible promissory
notes payable, approximate their fair value due to the short
maturity of these items or the use of market interest
rates.
Convertible Instruments
The
Company accounts for convertible instruments (when it has
determined that the embedded conversion options should not be
bifurcated from their host instruments) in accordance with ASC
470-20, Debt with Conversion and Other Options. Accordingly, the
Company records, when necessary, discounts to convertible notes for
the intrinsic value of conversion options embedded in debt
instruments based upon the differences between the fair value of
the underlying common stock at the commitment date of the note
transaction and the effective conversion price embedded in the
note. Debt discounts under these arrangements are amortized over
the term of the related debt to their earliest date of redemption.
The Company also records deemed dividends for the intrinsic value
of conversion options embedded in preferred shares based upon the
differences between the fair value of the underlying common stock
at the commitment date of the note transaction and the effective
conversion price embedded in the note.
ASC
815-40, Contracts in Entity’s own Equity, generally provides
that, among other things, if an event is not within the
entity’s control, such contract could require net cash
settlement and shall be classified as an asset or a
liability.
The
Company determines whether the instruments issued in the
transactions are considered indexed to the Company’s own
stock. During fiscal years 2014 through 2020 the Company’s
issued convertible securities with variable conversion provisions
that resulted in derivative liabilities. See discussion above under
derivative liabilities that resulted in a change in derivative
liability accounting.
|
|
F-9
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
continued
Revenue Recognition
All
revenues are recorded in accordance with ASC 606, which is
recognized when: (i) a contract with a client has been identified,
(ii) the performance obligation(s) in the contract have been
identified, (iii) the transaction price has been determined, (iv)
the transaction price has been allocated to each performance
obligation in the contract, and (v) the Company has satisfied the
applicable performance obligation over time.
Income Taxes
The
Company accounts for income taxes pursuant to the provisions of ASC
740-10, “Accounting for Income Taxes,” which requires,
among other things, an asset and liability approach to calculating
deferred income taxes. The asset and liability approach requires
the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of assets and liabilities. A
valuation allowance is provided to offset any net deferred tax
assets for which management believes it is more likely than not
that the net deferred asset will not be realized.
The
Company follows the provisions of ASC 740-10, “Accounting for
Uncertain Income Tax Positions”. When tax returns are filed,
it is highly certain that some positions taken would be sustained
upon examination by the taxing authorities, while others are
subject to uncertainty about the merits of the position taken or
the amount of the position that would be ultimately sustained. In
accordance with the guidance of ASC 740-10, the benefit of a tax
position is recognized in the financial statements in the period
during which, based on all available evidence, management believes
it is more likely than not that the position will be sustained upon
examination, including the resolution of appeals or litigation
processes, if any. Tax positions taken are not offset or aggregated
with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the
largest amount of tax benefit that is more than 50 percent likely
of being realized upon settlement with the applicable taxing
authority. The portion of the benefits associated with tax
positions taken that exceeds the amount measured as described above
should be reflected as a liability for uncertain tax benefits in
the accompanying balance sheet along with any associated interest
and penalties that would be payable to the taxing authorities upon
examination. The Company believes its tax positions are all highly
certain of being upheld upon examination. As such, the Company has
not recorded a liability for uncertain tax benefits.
The
Company has adopted ASC 740-10-25,
“
Definition of
Settlement”
,
which
provides guidance on how an entity should determine whether a tax
position is effectively settled for the purpose of recognizing
previously unrecognized tax benefits and provides that a tax
position can be effectively settled upon the completion of an
examination by a taxing authority without being legally
extinguished. For tax positions considered effectively settled, an
entity would recognize the full amount of tax benefit, even if the
tax position is not considered more likely than not to be sustained
based solely on the basis of its technical merits and the statute
of limitations remains open. As of June 30, 2021, the Company had
not filed tax returns for the tax years ending June 30, 2008
through 2020 and such returns, when filed, potentially will be
subject to audit by the taxing authorities for a minimum of three
years beyond the filing date under the three-year statute of
limitations. The Company has not accrued any potential tax
penalties associated with not filing these tax returns. Due to
recurring losses, management believes such potential tax penalties,
if any, would not be material in amount.
Share-Based Payments
The
Company accounts for stock-based compensation in accordance with
ASU 2020-07, Compensation – Stock Compensation (Topic 718).
This update is intended to reduce cost and complexity and to
improve financial reporting for share-based payments issued to
non-employees (for example, service providers, external legal
counsel, suppliers, etc.). The ASU expands the scope of Topic 718,
Compensation—Stock Compensation, which currently only
includes share-based payments issued to employees, to also include
share-based payments issued to non-employees for goods and
services. Consequently, the accounting for share-based payments to
non-employees and employees is substantially aligned.
Under
ASC Topic 718, “Compensation - Stock Compensation”.
Under the fair value recognition provisions of this topic,
stock-based compensation cost is measured at the grant date based
on the fair value of the award and is recognized as an expense on a
straight-line basis over the requisite service period, which is the
vesting period.
The
Company has elected to use the Cox, Ross & Rubinstein Binomial
Tree valuation model to estimate the fair value of its options,
which incorporates various subjective assumptions including
volatility, risk-free interest rate, expected life, and dividend
yield to calculate the fair value of stock option awards.
Compensation expense recognized in the statements of operations is
based on awards ultimately expected to vest and reflects estimated
forfeitures. ASC 718 requires forfeitures to be estimated at the
time of grant and revised, if necessary, in subsequent periods if
actual forfeitures differ from those estimates.
Segment Reporting
The
Company operates in one business segment which technologies are
focused on cybersecurity.
|
|
F-10
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
continued
Recent Accounting Pronouncements
All new
accounting pronouncements issued but not yet effective are not
expected to have a material impact on our results of operations,
cash flows or financial position. There have been no new accounting
pronouncements not yet effective that have significance to our
consolidated financial statements.
Basic and Diluted Earnings Per Share
Basic
earnings per share are calculated by dividing income available to
stockholders by the weighted-average number of shares of Common
Stock outstanding during each period. Diluted earnings per share
are computed using the weighted average number of shares of Common
Stock and the dilutive Common Stock share equivalents outstanding
during the period. Dilutive Common Stock share equivalents consist
of shares issuable upon the exercise of in-the-money stock options
and warrants (calculated using the modified-treasury stock method)
and conversion of other securities such as convertible debt or
convertible preferred stock. Potential common shares includable in
the computation of fully diluted per-share results are not
presented in the financial statements for the year ended June 30,
2021 and 2020 as their effect would be anti-dilutive. Potential
common shares that would be as follows:
|
|
|
For the Years ended June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
Weighted
average common shares outstanding
|
|
|
1,977,488,957
|
|
|
|
312,626,670
|
|
|
Effect
of dilutive securities-when applicable:
|
|
|
|
|
|
|
|
|
|
Convertible
promissory notes
|
|
|
142,079,692
|
|
|
|
1,014,701,330
|
|
|
Preferred
Stock
|
|
|
13,996,767
|
|
|
|
13,996,767
|
|
|
Warrants
|
|
|
12,165,260
|
|
|
|
500,000
|
|
|
Fully
diluted earnings per share—adjusted weighted-average shares
and assumed conversions
|
|
|
2,145,730,676
|
|
|
|
1,341,824,767
|
|
|
|
F-11
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 3: PREPAID LICENSE FEE
In
April 2021, the Company entered into two-year software license
agreement to enable product development. The license fee is prepaid
annually at a rate of $70,000 annually. The prepaid license fee is
amortized on a straight line basis over the term of the license
agreement, and is included in Development expense in our Statement
of Operations.
NOTE 4: DERIVATIVE LIABILITY
Derivative liability - warrants
The
Company issued warrants in connection with convertible notes
payable which were issued in January, February, and June 2021.
These warrants have price protection provisions that allow for the
reduction in the exercise price of the warrants in the event the
Company subsequently issues stock or securities convertible into
stock at a price lower than the stated conversion for each warrant,
ranging from $0.0055 to $0.02 per share exercise price of the
warrants. Simultaneously with any reduction to the exercise price,
the number of shares of common stock that may be purchased upon
exercise of each of these warrants shall be increased or decreased
proportionately, so that after such adjustment the aggregate
exercise price payable for the adjusted number of warrants shall be
the same as the aggregate exercise price in effect immediately
prior to such adjustment. Because it is indeterminate whether there
is a sufficient number of authorized and unissued shares exists at
the assessment date, the Company calculates a derivative liability
associated with the warrants in accordance with FASB ASC Topic
815-40-25.
Accounting for Derivative Warrant Liability
The
Company’s derivative warrant instruments have been measured
at fair value at June 30, 2021 using the Cox, Ross & Rubinstein
Binomial Tree valuation model. The Company recognizes the
derivative liability related to those warrants that contain price
protection features in its consolidated balance sheet as
liabilities. The liability is revalued at each reporting period and
changes in fair value are recognized currently in the consolidated
statements of operations. The initial recognition and subsequent
changes in fair value of the derivative warrant liability have no
effect on the Company’s cash flows.
Derivative liability – convertible notes
The
Company has certain convertible notes with variable price
conversion terms. U
pon the
issuance of these convertible notes and as a consequence of their
conversion features, the convertible notes give rise to derivative
liabilities.
The Company’s derivative liabilities
related to its convertible notes payable have been measured at fair
value at June 30, 2021 and June 30, 2020 using the Cox, Ross &
Rubinstein Binomial Tree valuation model.
The
revaluation of the warrants and convertible debt at each reporting
period, as well as the charges associated with issuing additional
convertible notes, and warrants with price protection features,
resulted in the recognition of a gain of $1,844,460 and $385,367
for the years ended June 30, 2021 and 2020, respectively in the
Company’s consolidated statements of operations, under the
caption “Gain in change of fair value of derivative
liability”. The fair value of the warrants at June 30, 2021
and June 30, 2020 was $69,334 and $250, respectively. The fair
value of the derivative liability related to the convertible debt
at June 30, 2021 and June 30, 2020 is $115,047 and $438,303,
respectively, which is reported on the consolidated balance sheet
under the caption “Derivative liability”.
The
Company has determined its derivative liability to be a Level 3
fair value measurement. The significant assumptions used in the
Cox, Ross & Rubinstein Binomial Tree valuation of the
derivative are as follows:
|
|
|
Year Ended June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
Effective
exercise price
|
|
$
|
0.00361
– $0.02
|
|
|
$
|
0.00032
– $0.00091
|
|
|
Effective
market price
|
|
$
|
0.006
|
|
|
$
|
0.0008
|
|
|
Expected
volatility
|
|
|
96.4%
to 304.0
|
%
|
|
|
323.22%
to 335.47
|
%
|
|
Risk-free
interest
|
|
|
0.05% -
0.25
|
%
|
|
|
0.05
|
%
|
|
Expected
terms
|
|
|
60 -
711 days
|
|
|
|
60 -
559 days
|
|
|
Expected
dividend rate
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
F-12
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 5: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE
Convertible Notes Payable
At June
30, 2021 and June 30, 2020 convertible debentures consisted of the
following:
|
|
|
June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
Convertible
notes payable
|
|
$
|
1,205,228
|
|
|
$
|
852,962
|
|
|
Discount
on convertible notes
|
|
|
(396,033
|
)
|
|
|
-
|
|
|
Convertible
notes, net
|
|
|
809,195
|
|
|
|
852,962
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable to ASC Recap
|
|
|
147,965
|
|
|
|
147,965
|
|
|
Total
|
|
$
|
957,160
|
|
|
$
|
1,000,927
|
|
The
Company had convertible promissory notes aggregating approximately
$957,000 and $1.1 million at June 30, 2021 and June 30, 2020,
respectively. The related accrued interest amounted to
approximately $162,765 and $503,068 at June 30, 2021 and June 30,
2020, respectively. The convertible notes payable bear interest at
rates ranging from 0% to 18% per annum. The convertible notes are
generally convertible, at the holders’ option, at rates
ranging from $0.00361 to $22,500 (as a result of two reverse stock
splits) per share. At June 30, 2021, $324,009 of convertible
promissory notes had matured, are in default and remain unpaid.
There is no provision in the note agreements for adjustments to the
interest rates on these notes in the event of default.
In June 2021, the Company obtained a legal opinion to extinguish
aged debt totaling $787,272 as detailed in the following table.
Each of the individual debt instruments were determined to be
beyond the statute of limitations and it was determined that the
Company has a complete defense to liability related to this debt
under the applicable statute of limitations.
|
Accrued
interest expense
|
|
$
|
385,803
|
|
|
Convertible
notes payable
|
|
|
401,469
|
|
|
|
|
$
|
787,272
|
|
On July
22, 2013 and May 6, 2014, the Company issued to ASC Recap LLC
(“ASC”) two convertible promissory notes with principal
amounts of $25,000 and $125,000, respectively. These two notes were
issued as a fee for services under a 3(a)10 transaction. While the
Company continues to carry the balance of these notes on its
balance sheet, management is disputing the notes and does not
believe that the balances of these notes are owed (see Note 12).
The July 22, 2013 note matured on March 31, 2014 and a balance of
$22,965 remains unpaid. The May 6, 2014 note matured on May 6, 2016
and remains unpaid. The notes are convertible into the common stock
of the Company at any time at a conversion price equal to (i) 50%
of the lowest closing bid price of our common stock for the twenty
days prior to conversion or (ii) fixed price of $0.15 or $0.30 per
share.
For the
year ended June 30, 2021, the following summarizes the conversion
of debt for common shares:
|
|
|
Amount
|
|
|
Adjustment
|
|
Conversion
|
|
|
Shares
|
Converted
|
|
Conversion
|
to
|
|
Price
|
|
Name
|
Issued
|
Principal
|
Interest
|
Expense
|
Fair Value
|
Total
|
Per Share
|
|
FirstFire
Global Opportunities Fund LLC
|
49,000,000
|
$
14,725
|
$
-
|
$
1,200
|
$
18,375
|
$
34,300
|
$
0.0003
|
|
Auctus
Funds, LLC
|
414,144,160
|
74,928
|
3,603
|
4,500
|
177,005
|
260,036
|
0.0002
|
|
Labrys
|
61,399,000
|
77,203
|
18,000
|
1,500
|
-
|
97,603
|
0.0016
|
|
TOTAL
|
524,543,160
|
$
166,856
|
$
21,603
|
$
7,200
|
$
195,380
|
$
391,039
|
$
0.00037
|
Transactions
Convertible Notes Payable
On February 8, 2021
, the
Company issued a promissory note to Labrys Fund, LP in the
principal amount of $500,000 for a purchase price of $475,000.
Pursuant to the Purchase Agreement, the Company issued to the
Investor a warrant to purchase 12,500,000 shares of the
Company’s common stock as a condition to closing. The closing
of the Purchase Agreement occurred on February 10, 2021, with the
Purchase Price funded to the Company on such
date.
The Note, which reflects a $25,000 original issuance discount,
bears interest at 8% per year and matures on February 8, 2022. The
Note includes an interim payment of $65,000, payable to the
Investor on August 8, 2021. The Company has the right to prepay the
Note in full, including accrued but unpaid interest, without
prepayment penalty provided an event of default, as defined
therein, has not occurred. The Note is convertible into shares of
the Company’s common stock at conversion price of $0.02 per
share, subject to adjustment as provided therein.
The Warrant is exercisable for a term of two-years from the date of
issuance, at an exercise price equal to $0.02 per share, subject to
adjustment as provided therein. The Warrants provide for cashless
exercise to the extent that the market price (as defined therein)
of one share of the Company’s common stock is greater than
the exercise price of the Warrant.
On January 12, 2021
, the
Company issued a promissory note to Labrys Fund, LP in the
principal amount of $200,000 for a purchase price of $190,000.
Pursuant to the Purchase Agreement, the Company issued to the
Investor a warrant to purchase 22,172,949 shares of the
Company’s common stock as a condition to closing. The closing
of the Purchase Agreement occurred on January 14, 2021, with the
Purchase Price funded to the Company on such
date.
The Note, which reflects a $10,000 original issuance discount,
bears interest at 8% per year and matures on January 12, 2022. The
Note includes an interim payment of $26,000, payable to the
Investor on July 12, 2021. The Company has the right to prepay the
Note in full, including accrued but unpaid interest, without
prepayment penalty provided an event of default, as defined
therein, has not occurred. The Note is convertible into shares of
the Company’s common stock at conversion price of $0.005 per
share, subject to adjustment as provided therein.
The Warrant is exercisable for a term of two-years from the date of
issuance, at an exercise price equal to 110% of the closing price
of the Company’s common stock on the date of issuance,
subject to adjustment as provided therein. The Warrants provide for
cashless exercise to the extent that the market price (as defined
therein) of one share of the Company’s common stock is
greater than the exercise price of the Warrant.
On November 23, 2020
, the
Company issued a promissory note to Labrys Fund, LP in the
principal amount of $150,000 for a purchase price of
$135,000.
Pursuant to the Purchase Agreement, the Company
issued Labrys 90,000,000 shares of the Company’s common stock
as a condition to closing.
The Note, which reflects a 10% original issuance discount, bears
interest at 12% per year and matures on November 23, 2021. The Note
includes an interim payment of $16,800, payable to the Investor
payable within 90 calendar days from the issuance of the Note. The
Company has the right to prepay the Note in full, including accrued
but unpaid interest, without prepayment penalty provided an event
of default, as defined therein, has not occurred. The Note is
convertible into shares of the Company’s common stock at
conversion price of $0.001575 per share, subject to adjustment as
provided therein.
On June 17, 2021
, the Company
issued a promissory note to Labrys Fund, LP in the principal amount
of $109,250 for a purchase price of $115,000.
The Note, which reflects a 5% original issuance discount, bears
interest at 8% per year and matures on June 17, 2022. he Company
has the right to prepay the Note in full, including accrued but
unpaid interest, without prepayment penalty provided an event of
default, as defined therein, has not occurred. The Note is
convertible into shares of the Company’s common stock at
conversion price of $0.006 per share, subject to adjustment as
provided therein. The closing of the Purchase Agreement occurred on
June 21, 2021.
Notes Payable
The
Company had promissory notes aggregating $411,748 and $205,000 at
June 30, 2021 and 2020, respectively. The related accrued interest
amounted to approximately $203,384 and $175,000 at June 30, 2021
and June 30, 2020, respectively. The notes payable bear interest at
rates ranging from 0% to 16% per annum and are payable monthly.
Promissory notes totaling $205,000 that are outstanding as of June
30, 2021 have matured, are in default, and remain unpaid. There is
no provision in the note agreements for adjustments to the interest
rates on these notes in the event of default.
In
October, 2020 the Company issued $ promissory notes totaling
$225,000 to three accredited investors. The notes have a term of
one year, and bear interest at 8%.
The
Company recognized interest expense on promissory notes payable of
approximately $28,400 and $16,000 during the fiscal years 2021 and
2020, respectively.
|
|
F-13
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 6: ACCRUED INTEREST PAYABLE
Changes
in accrued interest payable during the year ended June 30, 2021, is
as follows:
|
Accrued
interest payable at June 30, 2020
|
|
$
|
677,857
|
|
|
Interest
expense on notes payable for the year ended June, 2021
|
|
|
136,360
|
|
|
Write
off of accrued interest
|
|
|
(385,803
|
)
|
|
Payments
of accrued interest
|
|
|
(40,662
|
)
|
|
Conversion
of accrued interest into common stock
|
|
|
(21,603
|
)
|
|
Accrued
interest payable at June 30, 2021
|
|
$
|
366,149
|
|
Interest
expense for year ended June 30, 2021 was comprised of the
following:
|
Interest
expense for the year ended June 30, 2021
|
|
$
|
136,668
|
|
|
Amortization
of debt discount
|
|
|
305,499
|
|
|
Total
interest expense for the year ended June 30, 2021
|
|
$
|
442,167
|
|
NOTE 7: STOCKHOLDERS’ DEFICIT
Common Stock
At June
30, 2021, the Company had 10,000,000,000 authorized common shares.
At June 30, 2021, the Company has 3,098,271,081 common shares
issued of which 2,946,271,108 were outstanding, which is net of
152,666,659 unvested shares issued for the restricted stock awards
granted during the year. See Note 7.
Issuances of Common Stock During 2021
Convertible Notes Payable
During
the fiscal year ended June 30, 2021 the Company issued 524,543,160
shares of its common stock related to the conversion of $188,460 of
principal and accrued interest of its convertible notes payable, at
an average contract conversion price of $0.00037 per share. The
fair value of these conversions was $2,031,402.
Stock Based Compensation
During
the fiscal year ended June 30, 2021 the Company issued 220,000,000
shares of its $0.0001 par value common stock as compensation to its
directors and officers related to the vesting of restricted stock
grants. The shares were valued at $2,809,000, or $0.0128 per share,
based on the share price at the time of the
transactions.
During
the fiscal year ended June 30, 2021 we issued
56,666,670
shares of its
common stock to consultants, as compensation. The shares were
valued at $0.00625, the market price on the date of issuance for a
total value of $354,000. The expense is included in general and
administrative expenses and was recognized on the date the stock
was issued or vested.
Issuances of Common Stock During the Year ended June 30,
2020
Convertible Notes Payable
During
the fiscal year ended June 30, 2020 the Company issued 954,210,518
shares of its common stock related to the conversion of $333,220 of
principal and accrued interest of its convertible notes payable, at
an average contract conversion price of $0.00041 per share. The
fair value of these conversions was $1,059,572, resulting in a net
loss of $593,907.
Stock Based Compensation
During
the fiscal year ended June 30, 2020 the Company issued 348,000,000
shares of its $0.0001 par value common stock as compensation to its
directors and officers related to the vesting of restricted stock
grants. The shares were valued at $148,000, or $0.00043 per share,
based on the share price at the time of the
transactions.
During
the fiscal year ended June 30, 2020 we issued
199,850,000
shares of its
common stock to consultants, as compensation. The shares were
valued at $0.001, the market price on the date of issuance for a
total value of $198,735. The expense is included in general and
administrative expenses and was recognized on the date the stock
was issued or vested.
Common Stock Warrants
In
January and February 2021, we issued 39,370,677 warrants with a two
year life, and fixed exercise prices ranging from $0.0055 to $0.02
per share. An additional 9,239,130 warrant shares were issued due
to repricing certain warrants with a $0.02 exercise price to a
$0.0115 exercise price.
In
January 2019 we issued 500,000 warrants with a three year life and
a conversion price of $0.15 per share. These warrants had price
protection provisions that allow for the reduction in the current
exercise price upon the occurrence of certain events, including the
Company’s issuance of common stock or securities convertible
into or exercisable for common stock, such as options and warrants,
at a price per share less than the exercise price then in effect.
For instance, if the Company issues shares of its common stock or
options exercisable for or securities convertible into common stock
at an effective price per share of common stock less than the
exercise price then in effect, the exercise price will be reduced
to the effective price of the new issuance. Simultaneously with any
reduction to the exercise price, the number of shares of common
stock that may be purchased upon exercise of each of these warrants
shall be increased proportionately, so that after such adjustment
the aggregate exercise price payable for the adjusted number of
warrants shall be the same as the aggregate exercise price in
effect immediately prior to such adjustment.
The
holders of the warrants issued in 2019 exercised all of their
warrants on a cashless basis, during the three months ended
December 31, 2020. Due to the price protection features of these
warrants, the Company issued 374,500,000 warrant shares to these
warrant holders.
A
summary of the status of the Company’s outstanding common
stock warrants as of June 30, 2021 and changes during the fiscal
year ending on that date is as follows:
|
|
Number of
|
Weighted Average
|
|
|
Warrants
|
Exercise Price
|
|
Common
Stock Warrants
|
|
|
|
Balance
at beginning of year
|
500,000
|
$0.15
|
|
Granted
|
46,838,209
|
$0.011
|
|
Granted
due to repricing
|
347,761,534
|
0.0002
|
|
Exercised
|
(375,934,483)
|
0.0002
|
|
Forfeited
|
(7,000,000)
|
0.0002
|
|
Balance
at end of period
|
12,165,260
|
$0.011
|
|
|
|
|
|
Warrants
exercisable at end of period
|
12,165,260
|
$0.011
|
|
|
|
|
|
Weighted
average fair value of warrants granted due to repricing during the
period
|
|
$72,992
|
Preferred Stock
Series
A, B, and AA issued and outstanding shares of the Company’s
convertible preferred stock have a par value of $0.001. All classes
rank(ed) prior to any class or series of the Company’s common
stock as to the distribution of assets upon liquidation,
dissolution or winding up of the Company or as to the payment of
dividends. All preferred stock shall have no voting rights except
if the subject of such vote would reduce the amount payable to the
holders of preferred stock upon liquidation or dissolution of the
company and cancel and modify the conversion rights of the holders
of preferred stock as defined in the certificate of designations of
the respective series of preferred stock.
Series A Convertible Preferred Stock
The
Series A Preferred Stock has a stated value of $750 per share. Each
one share of Series A Preferred Stock is convertible into one (1)
share of Common Stock. In the event the Common Stock price per
share is lower than $0.10 (ten cents) per share then the Conversion
shall be set at $0.035 per share. The Common Stock shares are
governed by Lock-Up/Leak-Out Agreements.
Series B Convertible Preferred Stock
Thirty
million (30,000,000) shares of preferred stock were designated as a
new Series B Preferred stock in April 2016. This new Series B
Preferred Stock has a $0.001 par value, and each 300 shares is
convertible into one share of the Company’s common stock,
with a stated value of $375 per share.
Series AA Convertible Preferred Stock
In
March 2019, the Company authorized and issued one (1) share of
Series AA convertible preferred stock which provides for the holder
to vote on all matters as a class with the holders of Common Stock
and each share of Series AA Convertible Preferred Stock shall be
entitled to 51% of the common votes on any matters requiring a
shareholder vote of the Company. Each one share of Series AA
Convertible Preferred Stock is convertible into one (1) share of
Common Stock. Mark Lucky, our Chief Executive Officer, is the
holder of the one (1) share of Series AA Convertible Preferred
Stock.
|
|
F-14
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 8
-
STOCK-BASED
COMPENSATION
The
Company adopted an Incentive Stock Plan on April 18, 2021. This
plan is intended to provide incentives which will attract and
retain highly competent persons at all levels as employees of the
Company, as well as independent contractors providing consulting or
advisory services to the Company, by providing them opportunities
to acquire the Company’s common stock or to receive monetary
payments based on the value of such shares pursuant to Awards
issued. While the plan terminates 10 years after the adoption date,
issued options have their own schedule of termination. Options to
acquire shares of common stock may be granted at no less than fair
market value on the date of grant. Upon exercise, shares of new
common stock are issued by the Company.
Under
the 2021 Stock Incentive Plan, the Company has issued options to
purchase 16 million shares at an average price of $0.015 with a
fair value of $0.00. For the years ended June 30, 2021 and 2020,
the Company issued options to purchase 16 million and 0 shares,
respectively. Upon exercise, shares of new common stock are issued
by the Company.
For the
years ended June 30, 2021 and 2020, the Company recognized an
expense of approximately $18,554 and $0, respectively, of non-cash
compensation expense (included in General and Administrative
expense in the accompanying Consolidated Statement of Operations)
determined by application of a binomial option pricing model with
the following inputs: exercise price, dividend yields, risk-free
interest rate, and expected annual volatility. As of June 30, 2021,
the Company had approximately $143,141 of unrecognized pre-tax
non-cash compensation expense, which the Company expects to
recognize, based on a weighted-average period of 0.83 years. The
Company used straight-line amortization of compensation expense
over the one-year requisite service or vesting period of the grant.
The Company recognizes forfeitures as they occur. There are options
to purchase approximately 1,583,000 shares that have vested as of
June 30, 2021.
The
Company uses a binomial option pricing model to estimate the fair
value of its stock option awards and warrant issuances. The
calculation of the fair value of the awards using the binomial
option-pricing model is affected by the Company’s stock price
on the date of grant as well as assumptions regarding the
following:
|
|
|
Year ended June 30,
|
|
|||||
|
|
|
2021
|
|
|
2020
|
|
||
|
Expected
volatility
|
|
|
369.76%
- 496.27
|
%
|
|
|
-
|
%
|
|
Expected
term
|
|
|
4
Years
|
|
|
|
-
|
|
|
Risk-free
interest rate
|
|
|
0.76%-0.84
|
%
|
|
|
-
|
%
|
|
Forfeiture
Rate
|
|
|
0.00
|
%
|
|
|
-
|
%
|
|
Expected
dividend yield
|
|
|
0.00
|
%
|
|
|
-
|
%
|
The
expected volatility was determined with reference to the historical
volatility of the Company’s stock. The Company uses
historical data to estimate option exercise and employee
termination within the valuation model. The expected term of
options granted represents the period of time that options granted
are expected to be outstanding. The risk-free interest rate for
periods within the contractual life of the option is based on the
U.S. Treasury rate in effect at the time of grant.
A
summary of the status of the Company’s outstanding stock
options as of June 30, 2021 and 2020 and changes during the periods
ending on that date is as follows:
|
|
|
|
|
|
Weighted Average
|
|
|
Aggregate
|
|
|
Weighted
|
|
||||||||
|
|
|
|
|
|
Exercise
|
|
|
Grant Date
Fair
|
|
|
Intrinsic
|
|
|
Average
Remaining
|
|
|||||
|
|
|
Shares
|
|
|
Price
|
|
|
Value
|
|
|
Value
|
|
|
Term (Yrs)
|
|
|||||
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June
30, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0
|
|
|
|
|
|
|
Granted
|
|
|
16,000,000
|
|
|
|
0.015
|
|
|
|
-
|
|
|
|
0
|
|
|
|
4.96
|
|
|
Exercised
|
|
|
-
|
|
|
|
.-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
Forfeiture
and cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June
30, 2021
|
|
|
16,000,000
|
|
|
$
|
0.015
|
|
|
$
|
-
|
|
|
$
|
0
|
|
|
|
4.96
|
|
The
following table summarizes information about employee stock options
outstanding at June 30, 2021:
|
|
|
Outstanding Options
|
|
|
Vested Options
|
|
||||||||||||||||||
|
|
|
Number
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
||||||
|
|
|
Outstanding
|
|
|
Weighted
|
|
|
Weighted
|
|
|
Exercisable
|
|
|
Weighted
|
|
|
Weighted
|
|
||||||
|
|
|
at
|
|
|
Averaged
|
|
|
Averaged
|
|
|
at
|
|
|
Averaged
|
|
|
Averaged
|
|
||||||
|
|
|
June 30,
|
|
|
Remaining
|
|
|
Exercise
|
|
|
June 30,
|
|
|
Exercise
|
|
|
Remaining
|
|
||||||
|
Range of Exercise Price
|
|
2020
|
|
|
Life
|
|
|
Price
|
|
|
2020
|
|
|
Price
|
|
|
Life
|
|
||||||
|
$0.01
|
|
|
8,000,000
|
|
|
|
5.00
|
|
|
$
|
0.01
|
|
|
|
1,333,333
|
|
|
$
|
0.01
|
|
|
|
5.00
|
|
|
$0.02
|
|
|
8,000,000
|
|
|
|
4.92
|
|
|
$
|
0.02
|
|
|
|
250,000
|
|
|
$
|
0.02
|
|
|
|
4.92
|
|
|
Outstanding
options
|
|
|
16,000,000
|
|
|
|
4.96
|
|
|
$
|
0.015
|
|
|
|
1,583,333
|
|
|
$
|
0.015
|
|
|
|
4.96
|
|
As of
June 30, 2021, the Company had approximately $143,141 of
unrecognized pre-tax non-cash compensation expense, which the
Company expects to recognize, based on a weighted-average period of
0.96 years.
Restricted Stock Awards
Restricted
stock awards are awards of common stock that are subject to
restrictions on transfer and to a risk of forfeiture if the holder
leaves the Company before the restrictions lapse. The holder of a
restricted stock award is generally entitled at all times on and
after the date of issuance of the restricted shares to exercise the
rights of a shareholder of the Company, including the right to vote
the shares. The value of stock awards that vest over time was
established by the market price on the date of its
grant.
A
summary of the Company’s restricted stock activity for the
year ended
June 30, 2021
and 2020
is presented in the following table:
|
|
|
For the Year ended
|
|
|||||||||||||
|
|
|
June 30, 2021
|
|
|
June 30, 2020
|
|
||||||||||
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
||||
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
||||
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
Grant Date
|
|
||||
|
|
|
Shares
|
|
|
Fair Value
|
|
|
Shares
|
|
|
Fair Value
|
|
||||
|
Unvested
at beginning of period
|
|
|
666,659
|
|
|
$
|
0.06
|
|
|
|
3,544,447
|
|
|
$
|
0.06
|
|
|
Granted
|
|
|
198,000,000
|
|
|
$
|
0.0115
|
|
|
|
-
|
|
|
$
|
-
|
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,227,788
|
)
|
|
|
0.06
|
|
|
Vested
|
|
|
(66,666,659
|
)
|
|
$
|
0.0115
|
|
|
|
(1,650,000
|
)
|
|
$
|
0.06
|
|
|
Unvested
at end of period
|
|
|
132,000,000
|
|
|
$
|
0.0115
|
|
|
|
666,659
|
|
|
$
|
0.06
|
|
Unrecognized
compensation expense related to outstanding restricted stock awards
to consultants as of
June
30, 2021
was $1,518,000 and is expected to be recognized
over a weighted average period of 0.75 years.
NOTE 9: INCOME TAXES
The
Company has not filed its corporate tax returns since fiscal
2007.
Due to
recurring losses, the Company’s tax provision for the years
ended June 30 2021 and 2020 was $0.
The
difference between the effective income tax rate and the applicable
statutory federal income tax rate is summarized as
follows:
|
|
|
2021
|
|
|
2020
|
|
||
|
Statutory
federal rate
|
|
|
(21.7
|
)%
|
|
|
(21.0
|
)%
|
|
State
income tax rate, net of federal benefit
|
|
|
(3.6
|
)%
|
|
|
(3.6
|
)%
|
|
Permanent
differences, including stock-based compensation
|
|
|
8.6
|
%
|
|
|
8.6
|
%
|
|
Change
in valuation allowance
|
|
|
16.7
|
%
|
|
|
16.0
|
%
|
|
Effective
tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
At June
30, 2021 and 2020 the Company’s deferred tax assets were as
follows:
|
|
|
June 30, 2021
|
|
|
June 30, 2020
|
|
||
|
Tax
benefit of net operating loss carry forward
|
|
$
|
7,245,000
|
|
|
$
|
7,047,000
|
|
|
Intangible
|
|
|
-
|
|
|
|
-
|
|
|
Total
deferred tax assets
|
|
|
7,245,000
|
|
|
|
7,047,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
valuation allowance
|
|
|
(7,245,000
|
)
|
|
|
(7,047,000
|
)
|
|
Net
deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
As of
June 30, 2020, the Company had unused net operating loss carry
forwards of approximately $34.5 million available to reduce future
federal taxable income. Net operating loss carryforwards expire
through fiscal years ending 2039. Internal Revenue Code Section 382
places a limitation on the amount of taxable income that can be
offset by carryforwards after a change in control (generally a
greater than 50% change in ownership).
|
|
F-15
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 9: INCOME TAXES, continued
The
Company’s ability to offset future taxable income, if any,
with tax net operating loss carryforwards may be limited due to the
non-filing of tax returns and the impact of the statute of
limitations on the Company’s ability to claim such benefits.
Furthermore, changes in ownership may result in limitations under
Internal Revenue Code Section 382. Due to these limitations, and
other considerations, management has established full valuation
allowances on deferred tax assets relating to net operating loss
carryforward, as the realization of any future benefits from these
assets is uncertain.
The
Company’s valuation allowance at June 30, 2021 and 2020 was
$7,245,000 and $7,047,000, respectively. The change in the
valuation allowance during the year ended June 30, 2020 was an
increase of approximately $198,000. The change in the valuation
allowance during the year ended June 30, 2020 was a decrease of
$943,000. Effective December 22, 2018 a new tax bill was signed
into law that reduced the federal income tax rate for corporations
from 35% to 21.7% for the year ended June 30, 2020. Going forward
the blended rate will be 25.4% for future years.
NOTE 10: RELATED PARTY TRANSACTIONS
Equity
transactions with related parties are described in Note
7.
From
time to time we have borrowed operating funds from Mr. Mark Lucky,
our Chief Executive Officer and from certain Directors, for working
capital. The advances were payable upon demand and were interest
free. During year ended June 30, 2021 Mr. Lucky advanced $40,340 to
the Company. $0 in advances remain outstanding as of June 30, 2021.
Mr. Lucky is owed $1,451 for out-of-pocket expenses as of June 30,
2021, which is included on the balance sheet in Accounts payable
and accrued expenses.
NOTE 11: COMMITMENTS AND CONTINGENCIES
Operating Leases
The
Company operates virtually, with no office space rented. The
Company has no future minimum annual payments under non-cancelable
operating leases at June 30, 2021.
|
|
F-16
|
|
|
|
||
VISIUM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021 AND 2020
NOTE 11: COMMITMENTS AND CONTINGENCIES, continued
Contingencies
The
Company accounts for contingent liabilities in accordance with
Accounting Standards Codification (“ASC”) Topic 450,
Contingencies
. This
guidance requires management to assess potential contingent
liabilities that may exist as of the date of the financial
statements to determine the probability and amount of loss that may
have occurred, which inherently involves an exercise of judgment.
If the assessment of a contingency indicates that it is probable
that a material loss has been incurred and the amount of the
liability can be estimated, then the estimated liability would be
accrued in the Company’s financial statements. If the
assessment indicates that a potential material loss contingency is
not probable but is reasonably possible, or is probable but cannot
be estimated, then the nature of the contingent liability, and an
estimate of the range of possible losses, if determinable and
material, would be disclosed. For loss contingencies considered
remote, no accrual or disclosures are generally made. Management
has assessed potential contingent liabilities as of June 30, 2021,
and based on the assessment there are no probable loss
contingencies requiring accrual or disclosures within its financial
statements.
License Contingent Consideration
Our license agreements with the sellers of Threat Surface Solutions
Group, LLC includes a provision for a royalty payment based
on
ten percent (10%) of sales generated by Threat Surface
Solutions Group beginning on the Agreement Date and ending on
October 12, 2021, capped at a maximum royalty of
$2,500,000
. As of June 30,
2021, we have not generated any revenue related to these license
agreements.
Our license agreements with George Mason University and The MITRE
Corporation include provisions for a royalty payment on revenues
collected of 5% and 6%, respectively. As of June 30, 2021, we have
not generated any revenue related to these license
agreements.
Legal Claims
In July
2018 the Company was named as the defendant in a legal proceeding
brought by Tarpon Bay Partners LLC (the “Plaintiff”) in
the Judicial District Court of Danbury, Connecticut. Plaintiff
asserts that the Company failed to convert two convertible notes
held by Plaintiff. The Company is vigorously contesting this claim.
There are no other proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial
stockholder, is an adverse party or has a material interest adverse
to our interest.
In
January 2021 the Company won a dismissal of an involuntary
bankruptcy petition that was filed against the Company in the
Southern District Court of Florida on December 30, 2020, which had
been brought by three parties, (i) Tarpon Bay Partners LLC, (ii)
J.P. Carey Enterprises Inc., and (iii) Anvil Financial Mgmt LLC
(collectively the "Petitioning Creditors").
The
Court ruled in the Company's favor, dismissing the involuntary
bankruptcy petition and allowing the Company to file a motion with
the Court seeking compensatory and punitive damages. In addition,
Visium plans to file an affidavit of fees and costs incurred in
connection with Visium's defense of the Involuntary
Petition.
In
March 2021 the Company filed a Complaint for Damages and Other
Relief against Tarpon Bay Partners, LLC, a Florida limited
liability company; J.P. Carey Enterprises, Inc., a Florida profit
corporation; Anvil Financial Management, LLC, a Florida limited
liability company; Stephen Hicks, an individual; Joseph C Canouse,
an individual; Jeffrey M. Canouse, an individual; Paul A. Rachmuth,
an individual; and Litt Law Group, LLC, a New York Limited
Liability Company (collectively the “Defendants”)
related to the involuntary bankruptcy petition. The Company is
seeking damages from the Defendants for reasonable attorneys’
fees and costs, as well as compensatory, consequential special and
punitive damages.
The
Company is subject to litigation, claims, investigations, and
audits arising from time to time in the ordinary course of
business. Although legal proceedings are inherently unpredictable,
the Company believes that it has valid defenses with respect to any
matters currently pending against the Company and intends to defend
itself vigorously. The outcome of these matters, individually and
in the aggregate, is not expected to have a material impact on the
Company’s cash flows, results of operations, or financial
position.
Note 12 – Fair Value Measurement
Fair value measurements
At June
30, 2021 and 2020, the fair value of derivative liabilities is
estimated using the Cox, Ross & Rubinstein Binomial Tree
valuation model using inputs that include the expected volatility,
the implied risk-free interest rate, as well as the expected
dividend rate. The derivative liabilities are the only Level 3 fair
value measures.
At June
30, 2021, the estimated fair values of the liabilities measured on
a recurring basis are as follows:
|
|
|
Fair Value Measurements at
|
|
|||||||||
|
|
|
June 30, 2021:
|
|
|||||||||
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|||
|
Derivative
liability – Convertible notes
|
|
|
|
|
|
|
|
|
|
|
115,047
|
|
|
Derivative
liability – Warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
69,334
|
|
|
Total
derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
184,381
|
|
NOTE 13: SUBSEQUENT EVENTS
In the
quarter ended September 30 2021, our consultants vested 31,500,000
shares of our $0.0001 par value common stock, valued at $362,250,
or at an average price per share of $0.0115.
In the
quarter ended September 30 2021our directors and officers vested
30,000,000 shares of our $0.0001 par value common stock, valued at
$345,000, or at an average price per share of $0.0115.
In July
2021 t
he Company issued 198,046,241
shares of its $0.0001 par value common stock upon the conversion of
principal and interest of $807,930 of its outstanding convertible
notes, valued at $0.0042 per share.
In July 2021 t
he Company issued 6,587,229 shares of its
$0.0001 par value common stock upon the cashless exercise of a
common stock warrant.
In September 2021 the Company entered into two securities purchase
agreement (the “Purchase Agreements”) with a single
institutional investor (the “Purchaser”) resulting in
the raise of $1,500,000 in gross proceeds to the Company. Pursuant
to the terms of the Purchase Agreements, the Company agreed to
sell, in a registered director offering, an aggregate of
300,000,000 shares (the “Shares”) of the
Company’s common stock, par value $0.0001 per share (the
“Common Stock”) at a purchase price of $0.005 per Share
(the “Offering”). The Offerings closed on September 15,
2021 and September 27, 2021, respectively.
In September 2021 the Company repaid the remaining outstanding
convertible debt held by Labrys Funds, LP in the principal amount
of $115,000, plus accrued interest.
|
|
F-17
|
|
|
|
||
TABLE OF CONTENTS
Part IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Mine Safety DisclosuresPart IIItem 5. Market For Registrant S Common Equity, Related Stockholder Matters, and Issuer Purchases Of Equity SecuritiesItem 6. Selected Financial DataItem 7. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholders MattersItem 13. Certain Relationship and Related Party Transactions, and Director IndependenceItem 14. Principal Accountant Fees and ServicesPart IVItem 15. Exhibits and Financial Statement SchedulesItem 16. Form 10-k SummaryNote 1: Organization, Description Of Business and Going ConcernNote 2: Summary Of Significant Accounting PoliciesNote 2: Summary Of Significant Accounting Policies, ContinuedNote 3: Prepaid License FeeNote 4: Derivative LiabilityNote 5: Convertible Notes Payable and Note PayableNote 6: Accrued Interest PayableNote 7: Stockholders DeficitNote 8 - Stock-based CompensationNote 9: Income TaxesNote 9: Income Taxes, ContinuedNote 10: Related Party TransactionsNote 11: Commitments and ContingenciesNote 11: Commitments and Contingencies, ContinuedNote 12 Fair Value MeasurementNote 13: Subsequent Events