VISIUM TECHNOLOGIES, INC. Management's Discussion and Analysis and Results of Operations (form 10-Q)

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 May 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 Nine Month Periods Ended March 31, 2022 and 2021

                                    Three Months Ended                 Nine Months Ended
                                         March 31,                         March 31,
                                   2022             2021             2022             2021
Net revenues                   $          -     $     25,000     $          -     $     25,000

Operating expenses:
Selling, general and
administrative                 $  1,296,611     $  2,736,524     $  3,761,236     $  3,098,235
Development expense                  78,289           37,206          274,614          143,200
Total Operating Expenses          1,374,900        2,773,730        4,035,850        3,241,435

Loss from Operations             (1,374,900 )     (2,748,730 )     (4,035,850 )     (3,216,435 )

Other income (expenses):
Gain (loss) on change in
fair value of derivative
liabilities                         (76,707 )      1,405,081          (20,362 )        855,587
Derivative liability expense              -       (1,059,282 )                      (1,059,282 )
Warrant exercise expense                  -                -                -         (211,411 )
Gain (loss) on
extinguishment of debt                    -           28,863                -         (180,001 )
Interest expense                    (52,587 )       (171,575 )       (554,262 )       (247,579 )
Total other income
(expenses)                         (129,294 )       (203,087 )       (574,624 )       (842,686 )

Net loss                       $ (1,504,194 )   $ (2,545,643 )   $ (4,610,474 )   $ (4,059,121 )

Selling, General, and Administrative Expenses

Nine Month Period Ended March 31, 2022

For the nine months ended March 31, 2022, selling, general and administrative expenses were $3,761,236 as compared to $3,098,235 for the nine months ended March 31, 2021. For the nine month periods ended March 31, 2022 and 2021 selling, general and administrative expenses consisted of the following:

                                        Nine Months Ended
                                            March 31,
                                      2022            2021
Accounting expense                 $    50,866     $    42,488
Consulting fees                         24,575          49,900
Salaries                               722,283         261,500
Legal and professional fees            381,333         113,274
Travel expense                              34           1,086
Occupancy expense                          582             184
Telephone expense                        3,070           2,700
Marketing expense                      203,527             763
Website expense                         23,425           4,554
Investor relations expense                   -          10,000

Stock based consulting expense 1,196,704 125,750 Stock based compensation expense 1,094,900 2,464,000 Other

                                   59,937          22,040
                                   $ 3,761,236     $ 3,098,235

The increase in selling, general and administrative expenses of $656,414 during fiscal 2022, when compared with the prior year, is primarily due to an increase in salaries of $460,824, higher legal and professional fees of $268,055, higher marketing expense of $202,665, and higher website expense of $18,871, offset by lower overall stock-based compensation of $298,146, lower consulting expense of $29,750, 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



                         Nine-Months Ended
                             March 31,               %
                        2022          2021        Change
Development expense   $ 274,614     $ 143,200        79.7 %

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

                                                        Nine-Months Ended
                                                            March 31,               %
                                                       2022          2021        Change
Gain (loss) on change in fair value of derivative                                 (102.4 %)
liabilities                                          $ (20,362 )   $ 855,587

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.

Interest Expense



                      Nine-Months Ended
                          March 31,               %
                     2022          2021        Change
Interest expense   $ 554,262     $ 247,579       123.9 %

Interest expense represents stated interest of notes and convertible notes payable as well as amortization of debt discount. Interest expense is lower for the nine months ended March 31, 2022 due to lower debt discount amortization as compared to the prior year period.

Warrant exercise expense



                             Nine-Months Ended
                                 March 31,               %
                           2022           2021         Change

Warrant exercise expense   $   -       $ (211,411 )        N/A





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Three Month Period Ended March 31, 2022

For the three months ended March 31, 2022, selling, general and administrative expenses were $1,296,611 as compared to $2,736,524 for the three months ended March 31, 2021. For the three months ended March 31, 2022 and 2021 selling, general and administrative expenses consisted of the following:

                                       Three Months Ended
                                            March 31,
                                      2022            2021
Accounting expense                 $    14,821     $     2,500
Consulting fees                         15,725          39,900
Salaries                               285,138          93,500
Legal and professional fees            103,303          77,214
Travel expense                               -               -
Occupancy expense                          204             169
Telephone expense                          969             900
Marketing expense                      200,148             263
Website expense                          3,929           2,991
Investor relations expense                   -               -

Stock based consulting expense 410,324 86,750 Stock based compensation expense 252,900 2,419,000 Other

                                    9,151          13,337
                                   $ 1,296,611     $ 2,736,524

The decrease in selling, general and administrative expenses of $1,451,282 during the fiscal quarter ended March 31, 2022, when compared with the prior year period is primarily due to a decrease in stock-based compensation of $2,166,100, and a decrease in consulting expense of $28,600 offset by higher salaries expense of $191,679, higher legal and professional fees of $26,085, higher accounting expense of $12,022, and higher marketing expense of $199,786.

Development Expense



                        Three-Months Ended
                             March 31,               %
                         2022          2021        Change

Development expense $ 78,289 $ 37,206 681 %

Change in Fair Value of Derivative Liabilities

                                                    Three-Months Ended
                                                         March 31,                 %
                                                   2022           2021           Change
Gain (loss) on change in fair value of
derivative liabilities                           $ (76,707 )   $ 1,405,081           (106 )%

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.

Interest Expense



                     Three-Months Ended
                          March 31,               %
                     2022          2021        Change
Interest expense   $  52,587     $ 171,575       (48.1 )%

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 March 31, 2022 due to lower principal balances and lower debt discount amortization as compared to the prior year period.

Liquidity and Capital Resources

                                                               Balance at
                                                   March 31, 2022       June 30, 2021
Cash                                              $        352,594     $       125,166
Accounts payable and accrued expenses                     (460,895 )          (425,804 )
Accrued compensation                                      (677,794 )          (672,529 )
Notes, convertible notes, and accrued interest
payable                                           $     (1,671,289 )   $    (1,735,057 )

We do not have any material commitments for capital expenditures.

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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 $1,742,572 and $603,109 during the nine-month periods ended March 31, 2022 and 2021, respectively, and has a working capital deficit of approximately $2.4 million and $2.8 million at March 31, 2022 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.

Nine Months ended March 31, 2022

Net cash used in operations during the nine months ended March 31, 2022 increased by approximately $1,139,463 or 189% from the same period during fiscal year 2021. 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, and the sale of three convertible notes totaling $810,000.

Nine Months ended March 31, 2021

Net cash used in operations during the nine months ended March 31, 2021 increased by approximately $80,000 or 81% from the same period during fiscal year 2020. 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 nine-month period ended March 31, 2022.

We generated proceeds of $870,000 from the sale of three convertible notes. Pursuant to this transaction, the Company issued 81,000,000 commitment shares of our $0.0001 par value common stock, valued at $210,600, or $0.0026 per share.

Other outstanding obligations at March 31, 2022

Convertible Notes Payable

The Company had convertible promissory notes aggregating $930,031 outstanding at March 31, 2022. The accrued interest amounted to approximately $170,000 as of March 31, 2022. 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 March 31, 2022, all convertible promissory notes have matured and are in default.

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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 March 31, 2022. The related accrued interest amounted to approximately $199,000 at March 31, 2022. 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 March 31, 2022.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

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