VISIUM TECHNOLOGIES, INC. The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See ''Cautionary Statement Regarding Forward Looking Information'' elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.
Overview
Visium Technologies, Inc. is aFlorida corporation with offices based inFairfax, Virginia , focused on building a global cybersecurity business, by advancing technology and cybersecurity tools and services to support enterprises in protecting their most valuable assets - their data, on their networks, in the cloud, and Internet of Things ("IoT").Visium is a provider of cyber security automation, analytics and visualization.Visium operates in the traditional cyber security space, as well as in the cloud-based technology and Internet of Things ("IOT") spaces.Visium provides cybersecurity technology solutions, tools and services to support commercial enterprises and governments ability to protect their data.Visium's CyGraph technology provides visibility, advanced cyber monitoring intelligence, analytics and automation to help reduce risk, simplify cyber security and deliver better security outcomes. InMarch 2020 ,Visium entered into a software license agreement withMITRE Corporation to license a patented technology, known as CyGraph, a tool for cyber warfare analytics, visualization and knowledge management. CyGraph provides advanced analytics for cybersecurity situational awareness that is scalable, flexible and comprehensive.
Employees
At
Our principal offices are located at
Our common stock is quoted on the OTC Pink under the symbol "VISM".
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VISIUM TECHNOLOGIES, INC.
RESULTS OF OPERATIONS
Discussion of Results for Three Month Period Ended September 30, 2020 and 2019
Increase/ Increase/
Three-month period ended (Decrease) (Decrease)
September 30, in $ 2020 in % 2020
2020 2019 vs 2019 vs 2019
Operating expenses:
Selling, general and
administrative $ 193,196 $ 199,058 $ (5,862 ) (2.9 )%
Development expense 95,000 35,500 59,500 167.6 %
Total operating expenses 288,196 234,558 53,638 22.9 %
Operating loss (288,196 ) (234,558 ) 53,638 22.9 %
Other expense:
Gain on change in fair value of
derivative liabilities 124,332 278,012 (153,680 ) (55.3 )%
Loss on extinguishment of debt (154,901 ) (40,414 ) (114,487 ) 283.3 %
Interest expense (26,908 ) (100,481 ) 73,573 (73.2 )%
(57,477 ) 137,117 (194,594 ) (141.9 )%
Net loss $ (345,673 ) (97,441 ) $ (248,232 ) (254.8 )%
Selling, General, and Administrative Expenses
For the three months ended
Three Months Ended
September 30, Increase/
2020 2019 Decrease % Change
Accounting expense $ 22,950 $ 23,012 $ (62 ) (0.3 %
Consulting fees - 30,000 (30,000 ) (100.0 )%
Salaries 84,000 84,000 - 0.0 %
Legal and professional fees 10,500 7,060 3,440 48.7 %
Travel expense - 8,784 (8,784 ) (100.0 )%
Occupancy expense - 1,431 (1,431 ) (100.0 )%
Telephone expense 900 900 - 0.0 %
Website expense 651 660 (9 ) (1.4 )%
Marketing Expense - 9,948 (9,948 ) (100.0 )%Stock based consulting expense 27,000 29,000 (2,000 )
(6.9 )%
Stock based compensation 45,000 - 45,000 148.3 %
Other 2,195 4,263 (2,068 ) (48.5 )%
$ 193,196 $ 199,058 $ (5,862 ) (2.9 )%
The decrease in selling, general and administrative expenses during fiscal Q1 of 2020, when compared with the prior year, is primarily due to a decrease in consulting expense of$30,000 , travel expense of$8,748 , and marketing expense of$9,948 , offset primarily by an increase in stock based compensation of$45,000 .
We believe that our selling, general, and administrative expenses will increase as we increase our business activity over the remainder of fiscal 2020.
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Development Expense
Three-Months Ended
September 30, %
2020 2019 Change
Development expense $ 95,000 $ 35,500 $ 167.6 Development expense represents the expense of further enhancing and commercializing CyGraph. We believe that our development expense will continue at a lower expense rate for the remainder of fiscal 2020.
Interest Expense
Three-Months Ended
September 30 , %
2020 2019 Change
Interest expense $ 26,908 $ 100,481 $ (73.2 )%
Interest expense represents stated interest of notes and convertible notes payable, along with the amortization of debt discount. The decrease in interest expense during the three-month period endedSeptember 30, 2020 is primarily due to the decrease in discount amortization expense of$85,000 and by lower balances of interest-bearing promissory notes during the three-month period endingSeptember 30, 2020 when compared to the prior year period.
Liquidity and Capital Resources
Balance at
September 30, 2020 June 30, 2020
Cash $ 1,936 $ 30,251Accounts payable and accrued expenses 438,234
333,805
Accrued compensation 736,529
652,529
Notes, convertible notes, and accrued interest payable $ 1,836,926 $ 1,883,784
At
We do not have any material commitments for capital expenditures.
The objective of liquidity management is to ensure that we have ready access to sufficient funds to meet commitments and effectively implement our growth strategy. Our primary sources are financing activities such as the issuance of notes payable and convertible notes payable. In the past, we have mostly relied on debt and equity financing to provide for our operating needs. We cannot ascertain that we have sufficient funds from operations to fund our ongoing operating requirements throughJune 30, 2021 . We may need to raise funds to enhance our working capital and use them for strategic purposes. If such need arises, we intend to generate proceeds from either debt or equity financing. We intend to finance our operations using a mix of equity and debt financing. We do not anticipate incurring capital expenditures for the foreseeable future. We anticipate that we will need to raise approximately$180,000 per year in the near term to finance the recurring costs of being a publicly-traded company. In the long-term, we anticipate we will need to raise a substantial amount of capital to complete an acquisition. We are unable to quantify the resources we will need to successfully complete an acquisition. If these funds cannot be obtained, we may not be able to consummate an acquisition or merger, and our business may fail as a result.
Going Concern
The accompanying financial statements have been prepared on a going concern basis. The Company has used net cash in its operating activities of approximately$22,815 and$19,110 during the thee-month periods endedSeptember 30, 2020 and 2019, respectively, and has a working capital deficit of approximately$3.4 million and$3.4 million atSeptember 30, 2020 andJune 30, 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. 22
Capital Raising Transactions
None
Other outstanding obligations at
Convertible Notes Payable
The Company had convertible promissory notes aggregating$782,000 outstanding atSeptember 30, 2020 . The accrued interest amounted to approximately$521,600 as ofSeptember 30, 2020 . The Convertible Notes Payable bear interest at rates ranging between 0% and 18% per annum. Interest is generally payable monthly. The Convertible Notes Payable are generally convertible at rates ranging between$0.00024 and$0.15 per share, at the holders' option. AtSeptember 30, 2020 , approximately$752,000 of the promissory notes have matured.
Convertible notes payable to
OnJuly 22, 2013 andMay 6, 2014 , the Company issued toASC 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. TheJuly 22, 2013 note matured onMarch 31, 2014 and a balance of$22,965 remains unpaid. TheMay 6, 2014 note matured onMay 6, 2016 and remains unpaid. The notes are convertible into the common stock of the Company at any time at a conversion price equal to 50% of the lowest closing bid price of our common stock for the twenty days prior to conversion.
Notes Payable
The Company had promissory notes aggregating$205,000 atSeptember 30, 2020 . The related accrued interest amounted to approximately$179,000 atSeptember 30, 2020 . The Notes Payable bear interest at a rate of 16% per annum. Interest is payable monthly. All promissory notes have matured as ofSeptember 30, 2020 .
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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