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 TruContextTMto 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:

                                                                Increase/
                                    2021           2020        (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

Liquidity and Capital Resources



                                                      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.

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