VISIUM TECHNOLOGIES, INC. - Quarter Report: 2021 December (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________.

Commission file number 000-25753

VISIUM TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Florida		87-0449667
(State of Incorporation)		(IRS Employer Identification No.)

4094 MAJESTIC LANE, SUITE 360

FAIRFAX, VA 22033

(Address of principal executive offices)

(703) 273-0383

Registrant’s telephone number, including area code:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller Reporting Company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value per share, as of January 20, 2022, was 3,620,071,235.

When used in this quarterly report, the terms “Visium,” “the Company,” “we,” “our,” and “us” refer to Visium Technologies, Inc., a Florida corporation.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This quarterly report on Form 10-Q contains certain forward-looking statements. Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plans, including product and service developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other comparable terminology. These statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. These factors include, but are not limited to, our ability to implement our strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. The business and operations of Visium Technologies, Inc. are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under “Item 1A. Risk Factors” in our registration statement on Form 10-K as filed with the Securities and Exchange Commission, or the SEC, on October 13, 2021. Readers are also urged to carefully review and consider the various disclosures we have made in this report and in our Form 10-K.

VISIUM TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX

PART I - FINANCIAL INFORMATION		4
Item 1. Financial Statements		4
Consolidated Balance Sheets – December 31, 2021 (unaudited) and June 30, 2021		4
Consolidated Statements of Operations - Three and Six Months ended December 31, 2021 and 2020 (unaudited)		5
Consolidated Statements of Changes in Stockholders’ Deficit (unaudited) – Three and Six Months ended December 31, 2021 and 2020		6
Consolidated Statements of Cash Flows - Six Months Ended December 31, 2021 and 2020 (unaudited)		8
Notes to Consolidated Financial Statements (unaudited)		9
Item 2. Management’s Discussion and Analysis and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures About Market Risk		28
Item 4. Controls and Procedures		28
PART II - OTHER INFORMATION		29
Item 1. Legal Proceedings.		29
Item 1A. Risk Factors.		29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		29
Item 3. Defaults Upon Senior Securities.		29
Item 4. Mine Safety Disclosures.		29
Item 5. Other Information.		29
Item 6. Exhibits		30
SIGNATURES		31

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PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Visium Technologies, Inc.

CONSOLIDATED BALANCE SHEETS

	December 31, 2021			June 30, 2021(1)
	(Unaudited)
ASSETS
Current assets:
Cash	$	361,560		$	125,166
Prepaid license fee		20,417			55,418

Total current assets		381,977			180,584

Total assets	$	381,977		$	180,584

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued expenses	$	516,153		$	425,804
Accrued compensation		682,529			672,529
Accrued interest		368,908			366,149
Convertible notes payable to ASC Recap LLC		147,965			147,965
Convertible notes payable, net of discount of $0 and $396,033, as of December 31, 2021 and June 30, 2021, respectively		317,431			809,195
Derivative liabilities		128,036			184,381
Notes payable, net of discount of $0 and $18,252, as of December 31, 2021 and June 30, 2021, respectively		205,000			411,748
Total current liabilities		2,366,022			3,017,771

Commitments and contingencies (Note 10)

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 December 31, 2021 and June 30, 2021, 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 December 31, 2021 and June 30, 2021, respectively)		1,328			1,328
Series AA Convertible Stock ($0.001 par value; 1 share authorized, 1 share issued and outstanding as of December 31, 2021 and June 30, 2021, respectively)		0			0
Common stock, $0.0001 par value, 10,000,000,000 shares authorized: 3,681,071,235 shares issued and 3,620,071,235 outstanding at December 31, 2021, and 3,098,271,081 shares issued and 2,946,271,099 outstanding at June 30, 2021, respectively (See Note 7)		362,008			294,627
Additional paid in capital		52,109,948			48,217,903
Accumulated deficit		(54,471,321	)		(51,365,037	)
Total stockholders’ deficit		(1,984,045	)		(2,837,187	)

Total liabilities and stockholders’ deficit	$	381,977		$	180,584

(1)	Derived from audited financial statements

See Notes to Unaudited Consolidated Financial Statements.

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Visium Technologies, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
Net revenues	$	-		$	-		$	-		$	-

Operating expenses:
Selling, general and administrative		1,264,592			168,511			2,464,629			361,707
Development expense		85,912			10,994			196,325			105,994
Total Operating Expenses		1,350,504			179,505			2,660,954			467,701

Loss from Operations		(1,350,504	)		(179,505	)		(2,660,954	)		(467,701	)

Other income (expenses):
Gain (loss) on change in fair value of derivative liabilities		75,253			(673,826	)		56,345			(549,494	)
Gain (loss) on extinguishment of debt		-			(53,963	)		-			(208,864	)
Warrant exercise expense		-			(211,411	)		-			(211,411	)
Interest expense		(15,211	)		(49,096	)		(501,675	)		(76,004	)
Total other income (expenses)		60,042			(988,296	)		(445,330	)		(1,045,773	)

Net loss	$	(1,290,462	)	$	(1,167,801	)	$	(3,106,284	)	$	(1,513,474	)

Loss per common share basic and diluted	$	(0.000	)	$	(0.001	)	$	(0.001	)	$	(0.001	)

Weighted average common shares outstanding – basic and diluted		3,516,595,175			2,142,394,543			3,273,092,114			1,929,418,649

See Notes to Unaudited Consolidated Financial Statements.

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VISIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2021

(UNAUDITED)

For the three months ended December 31, 2021

	Preferred Stock - Series A $0.001 Par Value				Preferred Stock - Series B $0.001 Par Value				Preferred Stock - Series AA $0.001 Par Value				Common Stock $0.0001 Par Value				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance at September 30, 2021		13,992,340		13,992		1,327,670	$	1,328		1	$	0		3,512,404,569	$	351,241	$	51,204,608	$	(53,180,859	)	$	(1,609,690	)

Shares issued for consulting services														49,666,666		4,967		397,616					402,583
Shares issued as compensation														58,000,000		5,800		467,200					473,000
Amortization of deferred compensation																		40,524					40,524
Net loss for the three months ended December 31, 2021																				(1,290,462	)		(1,290,462	)
Balance at December 31, 2021		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		3,620,071,235	$	362,008	$	52,109,948	$	(54,471,321	)	$	(1,984,045	)

For the six months ended December 31, 2021

	Preferred Stock - Series A $0.001 Par Value				Preferred Stock - Series B $0.001 Par Value				Preferred Stock - Series AA $0.001 Par Value				Common Stock $0.0001 Par Value				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance at June 30, 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	)

Shares issued for consulting services														81,166,666		8,117		721,214						729,331
Shares issued as compensation														88,000,000		8,800		809,200						818,000
Shares issued for conversion of notes payable and accrued interest														198,046,241		19,805		811,242						831,047
Shares issued pursuant to sale of common stock														300,000,000		30,000		1,470,000						1,500,000
Shares issued for exercise of warrants														6,587,229		659		(659	)					-
Amortization of deferred compensation																		81,048						81,048
Net loss for the six months ended December 31, 2021																					(3,106,284	)		(3,106,284	)
Balance at December 31, 2021		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		3,620,071,235	$	362,008	$	52,109,948			(54,471,321	)	$	(1,984,045	)

See Notes to Unaudited Consolidated Financial Statements.

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VISIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2020

(UNAUDITED)

For the three months ended December 31, 2020

	Preferred Stock - Series A $0.001 Par Value				Preferred Stock - Series B $0.001 Par Value				Preferred Stock - Series AA $0.001 Par Value				Common Stock $0.0001 Par Value				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance at September 30, 2020		13,992,340		13,992		1,327,670	$	1,328		1	$	0		2,026,275,348	$	202,628	$	44,698,489	$	(48,337,251	)	$	(3,420,814	)

Shares issued for consulting services														200,000		20		11,980					12,000
Commitment shares issued pursuant to financings														225,000,000		22,500		110,529					133,029
Shares issued for conversion of notes payable														101,195,600		10,120		50,598					60,718
Shares issued for exercise of warrants														348,261,534		34,826		176,585					211,411
Net loss for the three months ended December 31, 2020																				(1,167,805	)		(1,167,805	)
Balance at December 31, 2020		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		2,700,932,482	$	270,094	$	45,048,181	$	(49,505,056	)	$	(4,171,461	)

For the six months ended December 31, 2020

	Preferred Stock - Series A $0.001 Par Value				Preferred Stock - Series B $0.001 Par Value				Preferred Stock - Series AA $0.001 Par Value				Common Stock $0.0001 Par Value				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance at June 30, 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 for consulting services														30,400,000		3,040		35,960					39,000
Shares issued as compensation														90,000,000		9,000		36,000					45,000
Commitment shares issued pursuant to financings														225,000,000		22,500		110,529					133,029
Shares issued for conversion of notes payable														463,144,160		46,314		248,022					294,336
Shares issued for exercise of warrants														348,261,534		34,826		176,585					211,411
Net loss for the six months ended December 31, 2020																				(1,513,474	)		(1,513,474	)
Balance at December 31, 2020		13,992,340	$	13,992		1,327,670	$	1,328		1	$	0		2,700,932,482	$	270,094	$	45,048,181		(49,505,056	)	$	(4,171,461	)

See Notes to Unaudited Consolidated Financial Statements.

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Visium Technologies, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six-month period ended
	December 31,
	2021			2020
Cash flows from operating activities:
Net loss	$	(3,106,284	)	$	(1,513,474	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,547,332			84,000
Amortization of debt discount		410,922			20,128
Warrant exercise expense		-			211,411
(Gain) loss on change in fair value of derivative liability		(56,345	)		549,494
Amortization of deferred compensation		81,048			-
Loss on extinguishment of debt		-			208,864
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		90,353			87,698
Prepaid expenses		35,000			-
Accrued interest		64,368			36,466
Accrued compensation		10,000			136,500
Net cash used in operating activities		(923,606	)		(178,913	)

Cash flows from financing activities:
Proceeds from sale of common stock		1,500,000			-
Repayment of convertible notes payable		(115,000	)		(18,879	)
Proceeds from notes payable		-			320,377
Repayment of promissory notes payable		(225,000	)		-
Advances from officers		-			(102,340	)

Net cash provided by financing activities		1,160,000			199,158

Net increase in cash		236,394			20,245

Cash, beginning of period		125,166			30,251

Cash, end of period	$	361,560		$	50,492

Supplemental disclosures of cash flow information:
Cash paid for interest	$	22,011		$	15,807
Cash paid for income taxes	$	-		$	-

Non-cash investing and financing activities:
Issuance of common stock for conversion of notes payable and accrued interest	$	831,047		$	93,256

See Notes to Unaudited Consolidated Financial Statements.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

NOTE 1: ORGANIZATION, GOING CONCERN AND BASIS OF PRESENTATION

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, critical infrastructure security, and the Internet of Things (“IOT”).

In April 2021 the Company created JAJ Advisory, LLC, a Viriginia limited liability company. The LLC was established to account for non-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 six months ended December 31, 2021 we had a net loss of $3,106,284, had net cash used in operating activities of $923,606 and had negative working capital of $1,984,045. 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.

COVID-19 Update

In March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic. The pandemic has had significant impacts around the globe and in many locations in which we operate. While the impacts have not caused a material adverse financial impact to our business to date, the future impacts remain uncertain. The extent to which the COVID-19 pandemic may impact our business going forward will depend on numerous evolving factors that we cannot reliably predict. These factors may adversely impact business spending on technology as well as customers’ ability to pay for our products and services on an ongoing basis. The effect, if any, of the COVID-19 pandemic would not be fully reflected in our results of operations and overall financial performance until future periods.

Throughout the pandemic we have continued to make investments to support business growth and product development, including investments in research and development as we continue to introduce new applications to extend the functionality of our products, sales and marketing to support customer growth, and other critical functions to ensure the highest levels of customer service and support as well as ensuring that we maintain the required infrastructure to be a public company. We expect to continue to make these investments. As of December 31, 2021, COVID-19 has not had a material impact on our results of operations or financial condition.

Basis of Presentation

The unaudited interim consolidated financial information furnished herein reflects all adjustments, consisting only of normal recurring items, which in the opinion of management are necessary to fairly state Visium Technologies, Inc.’s (the “Company” or “we”, “us” or “our”) financial position, results of operations and cash flows for the dates and periods presented and to make such information not misleading. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”), nevertheless, management of the Company believes that the disclosures herein are adequate to make the information presented not misleading.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended June 30, 2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC on October 13, 2021. The results of operations for the six months ended December 31, 2021, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending June 30, 2022.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

The fiscal year ends on June 30. References to fiscal year 2022, for example, refer to the fiscal year ending June 30, 2022.

Principles of Consolidation

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

Use of Estimates

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

Cash and Cash Equivalents

The Company considers all highly liquid, temporary, cash equivalents or investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents during the six months ended December 31, 2021 and year ended June 30, 2021.

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 December 31, 2021 and June 30, 2021 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.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

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 December 31, 2021 of $128,036.

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 2021 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.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

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 December 31, 2021, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2021 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.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Recent Accounting Pronouncements

The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this new

Basic and Diluted Earnings Per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of shares of Common Stock outstanding during each period. Diluted earnings per share are computed using the weighted average number of shares of Common Stock and the dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of in-the-money stock options and warrants (calculated using the modified-treasury stock method) and conversion of other securities such as convertible debt or convertible preferred stock. Potential common shares that would be as follows:

	December 31,		June 30,
	2021		2021
Weighted average common shares outstanding		3,273,092,114		1,977,488,957
Effect of dilutive securities-when applicable:
Convertible promissory notes		95,911,155		142,079,692
Preferred stock		13,996,767		13,996,767
Common stock options		8,000,000		-
Warrants		6,814,782		12,165,260
Fully diluted earnings per share—adjusted weighted-average shares and assumed conversions		3,397,814,818		2,145,730,676

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 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.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

NOTE 4: DERIVATIVE LIABILITIES

Derivative liability - warrants

The Company issued warrants in connection with convertible notes payable which were issued in January, February, and July 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 December 31, 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. Upon 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 December 31, 2021 and June 30, 2021 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 $56,345 and a loss of $549,494 for the six months ended December 31, 2021 and 2020, respectively in the Company’s consolidated statements of operations, under the caption “Gain (loss) on change of fair value of derivative liabilities”. The fair value of the warrants and convertible debt at December 31, 2021 and June 30, 2021 is as follows:

	December 31, 2021		June 30, 2021
Derivative liability - warrants	$	14,500	$	69,334
Derivative liability - convertible debt		113,536		115,047
Total derivative liabilities	$	128,036	$	184,381

These balances are reported on the consolidated balance sheet under the caption “Derivative liabilities”.

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

	Six Months Ended December 31,
	2021			2020
Effective exercise price	$0.0055 – $0.02			$0.00361 – $0.02
Effective market price		$0.0098			$0.006
Expected volatility	191.4%to315.8		%	96.4%to304.0		%
Risk-free interest	0.05%-0.28		%	0.05%-0.25		%
Expected terms	60 – 1,073 days			60 - 711 days
Expected dividend rate		0	%		0	%

Changes in the derivative liabilities during the six months ended December 31, 2021 is follows:

Derivative liabilities at June 30, 2021	$	184,381
Gain on change in fair value of derivative liabilities		(56,345	)
Derivative liabilities at December 31, 2021	$	128,036

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

NOTE 5: ACCRUED INTEREST PAYABLE

Changes in accrued interest payable during the six months ended December 31, 2021 is as follows:

Accrued interest payable at June 30, 2021	$	366,149
Interest expense accrued for the six months ended December 31, 2021		80,771
Interest paid in cash		(22,011	)
Conversion of accrued interest into common stock		(56,001	)
Accrued interest payable at December 31, 2021	$	368,908

NOTE 6: CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

Convertible Notes Payable

At December 31, 2021 and June 30, 2021 convertible debentures consisted of the following:

	December 31,		June 30,
	2021		2021
Convertible notes payable	$	317,431	$	1,205,228
Discount on convertible notes		-		(396,033	)
Convertible notes, net		317,431		809,195

Convertible notes payable to ASC Recap		147,965		147,965
Total	$	465,396	$	957,160

The Company had convertible promissory notes aggregating $317,431 and $1,205,228 at December 31, 2021 and June 30, 2021, respectively. The related accrued interest amounted to approximately $170,000 and $161,000 at December 31, 2021 and June 30, 2021, 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 $0.0019 to $22,500 per share, as a result of the two reverse stock splits. At December 31, 2021, approximately $317,000 of convertible promissory notes had matured, are in default and remain unpaid. There are no punitive default provisions included in the terms of these convertible promissory notes. In September 2021 the Company repaid in cash one convertible note in the principal amount of $115,000.

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 10 – Commitments and Contingencies in the footnotes to the financial statements. 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.

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For the six months ended December 31, 2021, the following summarizes the conversion of debt for common shares:

			Amount of		Amount of						Conversion
	Shares		Converted		Converted		Conversion				Price
Name	Issued		Principal		Interest		Expense		Total		Per Share
Labrys Funds		198,046,241	$	772,798	$	56,000	$	2,250	$	831,047	$	$0.00417
TOTAL		198,046,241	$	772,798	$	56,000	$	2,250	$	831,047	$	$0.00417

Notes Payable

The Company had promissory notes aggregating $205,000 at December 31, 2021 and $430,000 at June 30, 2021, respectively. The related accrued interest amounted to approximately $198,978 and $204,912 at December 31, 2021 and June 30, 2021, respectively. The notes payable bear interest at rates ranging from 0% to 16% per annum and are payable monthly. All promissory notes outstanding as of December 31, 2021 have matured, are in default, and remain unpaid. In October, 2021 the Company repaid three promissory notes totaling $225,000 of principal.

NOTE 7: STOCKHOLDERS’ DEFICIT

Common Stock

At December 31, 2021, the Company had 10,000,000,000 authorized common shares.

Issuances of Common Stock During the Six Months Ended December 31, 2021

Convertible Notes Payable

During the six months ended December 31, 2021 the Company issued 198,046,241 shares of its common stock related to the conversion of $831,047 of principal and accrued interest for three of its convertible notes payable, at an average contract conversion price of $0.00417 per share. These convertible notes have terms that include fixed conversion prices, and therefore the notes were converted consistent with the contractual conversion prices of each note.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

NOTE 7: STOCKHOLDERS’ DEFICIT, continued

Stock Based Compensation

During the six months ended December 31, 2021 the Company issued 88,000,000 shares of its $0.0001 par value common stock as compensation to its directors and officers. The shares were valued at $818,000, or $0.0093 per share, based on the share price at the time of the transactions.

During the six months ended December 31, 2021 81,166,666 shares of its $0.0001 par value common stock vested to six consultants, as compensation under six separate consulting agreements. The shares were valued at $729,331, or $0.009 per share.

Warrant Exercises

During the six months ended December 31, 2021 the Company issued 6,587,229 shares of its $0.0001 par value common stock pursuant to a two cashless exercises.

Sale of Common Stock

During the six months ended December 31, 2021 the Company entered into two securities purchase agreement (with a single institutional investor resulting in the raise of $1,500,000 in gross proceeds to the Company, in exchange for 300,000,000 shares of its $0.0001 par value common stock, or at $0.0005 per share.

Preferred Stock

Series A and B issued and outstanding shares of the Company’s convertible preferred stock have a par value of $0.001. All classes rank(ed) prior to any class or series of the Company’s common stock as to the distribution of assets upon liquidation, dissolution or winding up of the Company or as to the payment of dividends. All preferred stock shall have no voting rights except if the subject of such vote would reduce the amount payable to the holders of preferred stock upon liquidation or dissolution of the company and cancel and modify the conversion rights of the holders of preferred stock as defined in the certificate of designations of the respective series of preferred stock.

Series A Convertible Preferred Stock

The Series A Preferred Stock has a stated value of $750.00 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 2018, the Company authorized and issued one share of Series AA convertible preferred stock which provides for the holder to vote on all matters as a class with the holders of Common Stock and each share of Series AA Convertible Preferred Stock shall be entitled to 51% of the common votes on any matters requiring a shareholder vote of the Company. Each one share of Series AA Convertible Preferred Stock is convertible into one (1) share of Common Stock. Mark Lucky, our CFO, is the holder of the one share of Series AA Convertible Preferred Stock.

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 July 2021 we issued 851,299 warrants with a two year life, and a fixed exercise price of $0.0077.

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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.

A summary of the status of the Company’s outstanding common stock warrants as of December 31, 2021 and changes during the six months ended December 31, 2021 is as follows:

	Number of			Weighted Average
	Warrants			Exercise Price
Common Stock Warrants
Balance at June 30, 2021		12,165,260		$	0.011
Granted		3,753,418		$	0.0105
Exercised		(6,565,229	)		0.0074
Forfeited		(2,538,667	)		0.0074
Balance at December 31, 2021		6,814,782		$	0.0113

Warrants exercisable at end of period		6,814,782		$	0.0113

Weighted average fair value of warrants granted due to repricing during the period					N/A

The following table summarizes information about common stock warrants outstanding at December 31, 2021:

		Warrants Outstanding					Warrants Exercisable
Range of Exercise Price		Number Outstanding at December 31, 2021		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable at December 31, 2021		Weighted Average Exercise Price
$	0.0055		1,636,364	1.03 Years	$	0.0055		1,636,364	$	0.0055
$	0.0077		851,299	1.53 Years	$	0.0077		851,299	$	0.0077
$	0.0091		1,807,229	2.75 Years	$	0.0091		1,807,229	$	0.0091
$	0.0151		1,094,890	2.75 Years	$	0.0151		1,094,890	$	0.0151
$	0.0200		1,425,000	1.11 Years	$	0.0200		1,425,000	$	0.0200
			6,814,782	1.84 Years	$	0.113		6,814,782	$	0.0113

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 six months ended December 31, 2021 and 2020, the Company did not issue any options to purchase shares, respectively. Upon exercise, shares of new common stock are issued by the Company.

For the six months ended December 31, 2021 and 2020, the Company recognized an expense of approximately $81,048 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 December 31, 2021, the Company had approximately $103,004 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 4,250,000 shares that have vested as of December 31, 2021.

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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:

	Six months ended December 31,			Year ended June 30,
	2021			2021
Expected volatility	370% - 497		%	370%-497	%
Expected term	4 Years			4Years
Risk-free interest rate	0.76%-0.84		%	0.76%-0.84	%
Forfeiture Rate		0.00	%	0.00	%
Expected dividend yield		0.00	%	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 December 31, 2021 and June 30, 2021 and changes during the periods ending on that date is as follows:

				Weighted Average		Grant Date		Aggregate		Weighted Average
				Exercise		Fair		Intrinsic		Remaining
	Shares			Price		Value		Value		Term (Yrs)
Options
At June 30, 2021		16,000,000		$	0.015	$	-	$	0
Granted		-			-		-		-
Exercised		-		.-			-		-
Forfeiture and cancelled		(8,000,000	)		0.015				-
At December 31, 2021		8,000,000		$	0.015	$	-	$	0		4.42

The following table summarizes information about employee stock options outstanding at December 31, 2021:

		Outstanding Options						Vested Options
		Number						Number
		Outstanding		Weighted		Weighted		Exercisable		Weighted		Weighted
		at		Averaged		Averaged		at		Averaged		Averaged
		December 31,		Remaining		Exercise		December 31,		Exercise		Remaining
Range of Exercise Price		2021		Life		Price		2021		Price		Life
$	0.01		5,000,000		4.50	$	0.01		2,083,333	$	0.01		4.50
$	0.02		3,000,000		4.33	$	0.02		1,750,000	$	0.02		4.33
Outstanding options			8,000,000		4.42	$	0.01375		3,833,333	$	0.0146		4.42

As of December 31, 2021, the Company had approximately $62,481 of unrecognized pre-tax non-cash compensation expense, which the Company expects to recognize, based on a weighted-average period of 0.46 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 six months ended December 31, 2021 is presented in the following table:

	For the Six months ended
	December 31, 2021
				Weighted
				Average
				Grant Date
	Shares			Fair Value
Unvested at June 30, 2021		132,000,000		$	0.0115
Granted		56,000,000		$	0.0071
Forfeited		(10,833,333	)	$	0.0080
Vested		(116,166,667	)	$	0.0110
Unvested at December 31, 2021		61,000,000		$	0.0090

Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of December 31, 2021 was $513,500 and is expected to be recognized over a weighted average period of 0.3 years. The recognition of expense related to vested shares is accounted for as stock-based consulting expense and stock-based compensation expense.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

NOTE 9: RELATED PARTY TRANSACTIONS

Equity transactions with related parties are described in Note 7.

From time to time we have borrowed operating funds from Mr. Mark Lucky, our Chief Executive Officer and from certain Directors, for working capital. The advances were payable upon demand and were interest free. At December 31, 2021 there was $0 outstanding of such advances made to the Company.

NOTE 10: 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 December 31, 2021.

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 December 31, 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 George Mason University and The MITRE Corporation include provisions for a royalty payment on revenues collected of 5% and 6%, respectively. As of December 31, 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.

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VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

NOTE 11: SUBSEQUENT EVENTS

None.

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ITEM 2. Management’s Discussion and Analysis and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See ‘‘Cautionary Statement Regarding Forward Looking Information’’ elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

Visium Technologies, Inc. is a Florida corporation with offices based in Fairfax, 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.

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 provides advanced analytics for cybersecurity situational awareness that is scalable, flexible and comprehensive.

Employees

At January 13, 2022, we had 8 full time employees.

Our principal offices are located at 4094 Majestic Lane, Suite 360, Fairfax, Virginia 22033. Our telephone number is (703) 273-0383.

Our common stock is quoted on the OTC Pink under the symbol “VISM”.

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VISIUM TECHNOLOGIES, INC.

RESULTS OF OPERATIONS

Three and Six Month Periods Ended December 31, 2021 and 2020

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
Operating expenses:
Selling, general and administrative	$	1,264,592		$	168,511		$	2,464,629		$	361,707
Development expense		85,912			10,994			196,325			105,994
Total Operating Expenses		1,350,504			179,505			2,660,954			467,701

Loss from Operations		(1,350,504	)		(179,505	)		(2,660,954	)		(467,701	)

Other income (expenses):
Gain (loss) on change in fair value of derivative liabilities		75,253			(673,826			56,345			(549,494
Warrant exercise expense		-			(211,411			-			(211,411
Gain (loss) on extinguishment of debt		-			(53,963	)		-			(208,864	)
Interest expense		(15,211	)		(49,096	)		(501,675	)		(76,004	)
Total other income (expenses)		60,042			(988,296	)		(445,330	)		(1,045,773

Net loss	$	(1,290,462	)	$	(1,167,801	)	$	(3,106,284	)	$	(1,513,474	)

Selling, General, and Administrative Expenses

Six Month Period Ended December 31, 2021

For the six months ended December 31, 2021, selling, general and administrative expenses were $2,464,629 as compared to $361,707 for the six months ended December 31, 2020. For the six month periods ended December 31, 2021 and 2020 selling, general and administrative expenses consisted of the following:

	Six Months Ended
	December 31,
	2021		2020
Accounting expense	$	36,045	$	39,988
Consulting fees		8,850		10,000
Salaries		437,145		168,000
Legal and professional fees		278,030		36,060
Travel expense		34		1,086
Occupancy expense		378		15
Telephone expense		2,102		1,800
Marketing expense		3,379		500
Website expense		19,496		1,563
Investor relations expense		-		10,000
Stock based consulting expense		786,380		39,000
Stock based compensation expense		842,000		45,000
Other		50,790		8,695
	$	2,464,629	$	361,707

The increase in selling, general and administrative expenses of $2,102,914 during fiscal 2022, when compared with the prior year, is primarily due to an increase in stock-based compensation of $1,544,380, higher legal and professional fees of $241,970, higher salaries expense of $269,145, and higher website expense of $17,933, offset by lower consulting fees of $1,150, lower accounting expense of $3,943, and lower investor relations expense of $10,000.

We believe that our selling, general, and administrative expenses will decline over the rest of the current fiscal year due to lower stock based compensation expense, offset by increased expenses related to an increase our business activity over the remainder of fiscal 2022.

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Development Expense

	Six-Months Ended
	December 31,				%
	2021		2020		Change
Development expense	$	196,325	$	105,994		85	%

Development expense represents the expense to further enhance and commercialize CyGraph. We believe that we will incur an additional $50,000 of development expense during the remainder of fiscal 2022.

Change in Fair Value of Derivative Liabilities

	Six-Months Ended
	December 31,					%
	2021		2020			Change
Gain (loss) on change in fair value of derivative liabilities	$	56,345	$	(549,494	)	(487%)

The change in fair value of derivative liabilities results from the changes in the fair value of the derivative liability due to the application of ASC 815, resulting in either income or expense, depending on the difference in fair value of the derivative liabilities between their measurement dates driven by the change in the per share price of the Company’s common stock.

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Interest Expense

	Six-Months Ended
	December 31,				%
	2021		2020		Change
Interest expense	$	501,675	$	76,004		1,708	%

Interest expense represents stated interest of notes and convertible notes payable as well as amortization of debt discount. Interest expense is lower for the six months ended December 31, 2021 due to lower debt discount amortization as compared to the prior year period.

Warrant exercise expense

	Six-Months Ended
	December 31,					%
	2021		2020			Change
Warrant exercise expense	$	-	$	(211,411	)		N/A

The loss on settlement of debt is related to the difference between the conversion price used when convertible notes are converted into common and the share price on the date of the conversion.

Three Month Period Ended December 31, 2021

For the three months ended December 31, 2021, selling, general and administrative expenses were $168,511 as compared to $215,706 for the three months ended December 31, 2020. For the three months ended December 31, 2021 and 2020 selling, general and administrative expenses consisted of the following:

	Three Months Ended
	December 31,
	2021			2020
Accounting expense	$	12,974		$	17,038
Consulting fees		1,350			10,000
Salaries		278,161			84,000
Legal and professional fees		10,500			25,560
Travel expense		34			1,086
Occupancy expense		(189	)		15
Telephone expense		953			900
Marketing expense		2,223			500
Website expense		12,998			912
Investor relations expense		-			10,000
Stock based consulting expense		419,107			12,000
Stock based compensation expense		497,000			-
Other		29,481			6,500
	$	1,264,592		$	168,511

The increase in selling, general and administrative expenses of $1,096,081 during the fiscal quarter ended December 31, 2021, when compared with the prior year period is primarily due to an increase in stock-based compensation of $904,107, and higher salaries expense of $194,161, offset by lower legal and professional fees of $15,060, lower accounting expense of $4,064, and lower consulting fees of $8,650.

Development Expense

	Three-Months Ended
	December 31,				%
	2021		2020		Change
Development expense	$	85,912	$	10,994		681	%

Change in Fair Value of Derivative Liabilities

	Three-Months Ended
	December 31,					%
	2021		2020			Change
Gain (loss) on change in fair value of derivative liabilities	$	75,253	$	(673,826	)		(111	)%

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Interest Expense

	Three-Months Ended
	December 31,				%
	2021		2020		Change
Interest expense	$	15,211	$	49,096		69	)%

Interest expense represents stated interest of notes and convertible notes payable as well as amortization of debt discount. Interest expense is lower for the three months ended December 31, 2021 due to lower principal balances and lower debt discount amortization as compared to the prior year period.

Liquidity and Capital Resources

	Balance at
	December 31, 2021			June 30, 2021
Cash	$	361,560		$	125,166
Accounts payable and accrued expenses		(576,153	)		(425,804	)
Accrued compensation		(682,529	)		(672,529	)
Notes, convertible notes, and accrued interest payable	$	(1,039,304	)	$	(1,735,057	)

We do not have any material commitments for capital expenditures.

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

We cannot ascertain that we have sufficient funds from operations to fund our ongoing operating requirements through June 30, 2022. 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 $923,606 and $178,917 during the six-month periods ended December 31, 2021 and 2020, respectively, and has a working capital deficit of approximately $2.0 million and $2.8 million at December 31, 2021 and June 30, 2021, 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 target. The outcome of these matters cannot be predicted at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results.

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Six months ended December 31, 2021

Net cash used in operations during the six months ended December 31, 2021 increased by approximately $744,688 or 416% from the same period during fiscal year 2020. The increase in cash used in operations is primarily due to the increase in product development expenses, cash paid for legal and professional fees , and consulting and business development expense. This cash was obtained through the sale of common stock that netted the Company $1,500,000.

Six months ended December 31, 2020

Net cash used in operations during the six months ended December 31, 2020 increased by approximately $80,000 or 81% from the same period during fiscal year 2019. The increase in cash used in operations is primarily due to the increase in consulting and business development expense and cash paid for legal and professional fees. This cash was obtained through the sale of four promissory notes that netted the Company $360,000.

Capital Raising Transactions

Sale of Common Stock

We generated net proceeds of $1,500,000 from the sale of 300,000,000 shares of common stock at a per share price of $0.005 during the six-month period ended December 31, 2021.

Other outstanding obligations at December 31, 2021

Convertible Notes Payable

The Company had convertible promissory notes aggregating $317,431 outstanding at December 31, 2021. The accrued interest amounted to approximately $170,000 as of December 31, 2021. 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 $0.0019 and $22,500 per share, at the holders’ option. At December 31, 2021, all convertible promissory notes have matured and are in default.

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 $205,000 at December 31, 2021. The related accrued interest amounted to approximately $199,000 at December 31, 2021. The Notes Payable bear interest at rates ranging between 8% and 16% per annum. Interest is generally payable monthly. All promissory notes have matured as of December 31, 2021.

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 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 December 31, 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;

	●	Our Board of Directors consisted 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 and Chief Financial Officer, concluded that our internal control over financial reporting was not effective as of December 31, 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

During the quarter ended December 31, 2021, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

With the exception of the item described below, at December 31, 2021 the Company is not the subject of, or party to, any pending or threatened, legal actions.

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. The plaintiff asserts that the Company failed to convert two convertible notes held by the Plaintiff. The Company is vigorously contesting this claim.

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

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K filed on September 27, 2021, which could materially affect our business operations, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business operations and/or financial condition. There have been no material changes to our risk factors since the filing of our Form 10-K.

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

During the six months ended December 31, 2021 the Company issued 198,046,241 shares of its common stock related to the conversion of $831,048 of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.0042 per share. The issuance was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

During the six months ended December 31, 2021 the Company issued 88,000,000 shares of its $0.0001 par value common stock to its officers and directors. The shares were valued at $818,000, or $0.009 per share.

During the six months ended December 31, 2021 the Company issued 81,166,663 shares of its $0.0001 par value common stock to five consultants, as compensation under five separate consulting agreements. The shares were valued at $729,334, or $0.009 per share.

During the six months ended December 31, 2021 the Company sold 300,000,000 shares of its $0.0001 par value common stock in exchange for $1,500,000. The stock was sold at an average share price of $0.005.

During the six months ended December 31, 2021 the Company issued 6,587,229 shares of its $0.0001 par value common stock pursuant to the cashless exercise of a common stock warrant.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable to our operations.

Item 5. Other Information.

None

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Item 6. Exhibits

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

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

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

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

*	Filed herewith.

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SIGNATURES

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

	VISIUM TECHNOLOGIES, INC.

	By:	/S/ Mark B. Lucky
January 20, 2022		Mark B. Lucky
		CEO, principal executive officer

	By:	/S/ Mark Lucky
January 20, 2022		Mark Lucky
		CFO, principal accounting officer