VISIUM TECHNOLOGIES, INC. 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
Since
In
Results of Operations
Selling, General, and Administrative Expenses
For the year endedJune 30, 2020 , selling, general and administrative expenses were$917,993 as compared to$2,721,467 for the year endedJune 30, 2019 , a decrease of$1,803,474 or approximately 67.1%. For the years endedJune 30, 2020 and 2019 selling, general and administrative expenses consisted of the following: Increase/ 2020 2019 (Decrease) % Change Accounting expense$ 5,581 $ 11,000 $ (5,419 ) (49.3 )% Consulting fees 103,800 125,500 (21,700 ) (17.3 )% Salaries 336,000 320,000 16,000 5.0 % Legal and professional fees 59,550 82,630 (23,080 ) (27.9 )% Travel expense 9,786 3,342 6,444 192.8 % Occupancy expense 4,719 9,319 (4,600 ) (49.4 )% Telephone expense 3,600 3,600 - 0.0 % Marketing expense 8,199 - 8,199 N/A Website expense 2,951 2,555 396 15.5 % Investor relations expense 20,000 28,500 (8,500 ) (29.8 )% Stock based consulting expense 198,735 174,500 24,235 13.9 % Stock based compensation 148,000 1,901,500 (1,753,500 ) (92.2 )% Other 17,072 59,021 (41,949 ) (71.1 )%$ 917,993 $ 2,721,467 $ (1,803,474 ) (66.3 )%
The decrease in selling, general and administrative expenses during fiscal 2020, when compared with the prior year, is primarily due to a decrease in stock-based compensation, legal expenses, and salaries, offset by increases in salary expense, and stock-based consulting expense.
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Amortization Expense
Years Ended
June 30 , %
2020 2019 Change
Customer relationships $-
The increase in amortization expense is due to the amortization of the customer
relationships intangible asset resulting from the acquisition of
Change in Fair Value of Derivative Liability
Years ended
June 30,
2020 2019
Gain (loss) on change in fair value of derivative
liabilities $385,367 $(183,130 ) 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 2020 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, %
2020 2019 Change
Derivative liability expense
The Company issued convertible notes in
Interest Expense
Years Ended
June 30, %
2020 2019 Change
Interest Expense $ 323,021 $ 276,087 17.0 %
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 2020 is primarily due to higher amortization of debt
discount of
Gain on Debt Write-Off
Years Ended
June 30,
2020 2019
Gain (loss) on debt write off/conversions
During the twelve months ended
In
Accounts payable and accrued expenses$ 312,001 Accrued interest expense 1,184,214 Convertible notes payable 671,706 Promissory notes payable 65,241$ 2,292,162 10 Loss on impairment Years Ended June 30, 2020 2019 Loss on impairment $ -$ 407,002
In
Net intangible asset as of date of impairment
(52,315 )
Loss on impairment $ 407,002 Liquidity and Capital Resources
Balance at June 30,
2020 2019
Cash $ 30,251 $ 18,668
Accounts payable and accrued expenses (333,805 ) (213,805 )
Accrued compensation (652,529 ) (316,529 )
Notes, convertible notes, and accrued interest (1,883,784 ) (1,863,898 )
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 were unable to generate sufficient funds from operations to fund our ongoing
operating requirements through
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
11 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
Years Ended
June 30,
2020 2019
Cash flows from operating activities:
Net loss $ (1,542,450 ) $ (1,757,932 )
Non-cash Adjustments:
Gain (loss) on debt settlement and write off
expense 593,907 (2,303,147 )
Stock based compensation 346,735 2,076,000
Amortization of debt discount 206,249 283,637
Derivative liability expense 61,396 341,423
(Gain) loss on change in derivative liability (385,367 ) 183,130
Impairment expense - 407,002
Changes in assets and liabilities
Accrued interest 145,941 133,189
Accrued compensation 336,000 160,704
Accounts payable and accrued expenses 130,832 (90,751 )
Net cash used in operations (106,757 ) (566,745 )
Cash flows from financing activities:
Advance from officers 40,340 41,000
Proceeds from sale of common stock - 250,501
Proceeds from issuance of convertible notes
payable, net of debt issuance costs 78,000 282,500
Net cash provided by financing activities 118,340 574,001
Net increase in cash $ 11,583 $ 7,256
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Year ended June 30, 2020 Net cash used in operations in fiscal year 2020 decreased by
Year ended
Net cash used in operations in fiscal year 2019 increased by
Capital Raising Transactions
Issuance of Convertible Notes Payable
We generated net proceeds of
Convertible Notes Payable
The Company had convertible promissory notes aggregating approximately
Balance at Balance at
June 30, 2020 June 30, 2019 Convertible Notes Payable
- (158,333 )
Notes Payable, net of discount
Convertible notes payable to
On
Notes Payable
The Company had promissory notes aggregating approximately
Common Stock Warrants
In
A summary of the status of the Company's outstanding common stock warrants as of
Number of Weighted Average
Warrants Exercise Price
Common Stock Warrants
Balance at June 30, 2019 500,000 $ 0.15
Granted - -
Exercised - -
Forfeited - -
Balance at June 30, 2020 500,000 $ 0.15
Warrants exercisable at end of period 500,000 $ 0.15
Weighted average fair value of warrants
granted during the period $ -
Derivative Liability
The Company recognizes all derivative financial instruments on its balance sheet at fair value.
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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
The Company's critical accounting policies are as follows:
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.
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