0001493152-18-016129.txt : 20181114 0001493152-18-016129.hdr.sgml : 20181114 20181114163155 ACCESSION NUMBER: 0001493152-18-016129 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 53 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181114 DATE AS OF CHANGE: 20181114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISIUM TECHNOLOGIES, INC. CENTRAL INDEX KEY: 0001082733 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 870449667 STATE OF INCORPORATION: FL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25753 FILM NUMBER: 181184421 BUSINESS ADDRESS: STREET 1: 401 E. LAS OLAS BOULEVARD, STREET 2: SUITE 1400 CITY: FORT LAUDERDALE STATE: FL ZIP: 33301 BUSINESS PHONE: (954) 712-7487 MAIL ADDRESS: STREET 1: 401 E. LAS OLAS BOULEVARD, STREET 2: SUITE 1400 CITY: FORT LAUDERDALE STATE: FL ZIP: 33301 FORMER COMPANY: FORMER CONFORMED NAME: NuSTATE ENERGY HOLDINGS, INC. DATE OF NAME CHANGE: 20071227 FORMER COMPANY: FORMER CONFORMED NAME: Fittipaldi Logistics, Inc. DATE OF NAME CHANGE: 20061024 FORMER COMPANY: FORMER CONFORMED NAME: POWER2SHIP INC DATE OF NAME CHANGE: 20030516 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2018

 

[  ] 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.)

 

11325 RANDOM HILLS ROAD, Suite 360

FAIRFAX, VA 22030

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (703) 225-3443

 

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 [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

 

Yes [  ] No [X]

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]
(Do not check if smaller reporting company)  

 

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

 

The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value per share, as of November 13, 2018, was 17,924,545.

 

When used in this quarterly report, the terms “Visium,” “the Company,” “we,” “our,” and “us” refer to Visium Technologies, Inc., a Nevada 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 Form 10-K as filed with the Securities and Exchange Commission, or the SEC, on August 20, 2018. Readers are also urged to carefully review and consider the various disclosures we have made in this report and in our registration statement on Form 10-K.

 

   

 

 

VISIUM TECHNOLOGIES, INC.

 

INDEX

 

PART I - FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Balance Sheets – September 30, 2018 (unaudited) and June 30, 2018 3
Statements of Operations - Three months ended September 30, 2018 and 2017 (unaudited) 4
Statements of Cash Flows - Three months ended September 30, 2018 and 2017 (unaudited) 5
Notes to Unaudited Financial Statements 6
Item 2. Management’s Discussion and Analysis and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 21
PART II - OTHER INFORMATION 22
Item 1. Legal Proceedings. 22
Item 1A. Risk Factors. 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 22
Item 3. Defaults Upon Senior Securities. 22
Item 4. Mine Safety Disclosures. 22
Item 5. Other Information. 22
Item 6. Exhibits 22
SIGNATURES 23

 

2
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Visium Technologies, Inc.

BALANCE SHEETS

 

   September 30, 2018   June 30, 2018 (1) 
    (Unaudited)      
ASSETS          
Current assets:          
Cash  $5,480   $11,412 
           
Total current assets   5,480    11,412 
           
Total assets  $5,480   $11,412 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current liabilities:          
Accounts payable and accrued expenses  $610,628   $626,583 
Accrued compensation   202,825    155,825 
Accrued interest   1,714,512    1,686,054 
Convertible notes payable to ASC Recap LLC   147,965    147,965 
Convertible notes payable, net of discount of $0 and $542   1,547,384    1,617,984 
Notes payable   270,241    270,241 
Derivative liabilities   

567,232

    - 
Due to officers   20,000    21,000 
Total current liabilities   

5,080,787

    4,525,652 
           
Commitments and Contingencies (Note 9)          
           
Stockholders’ deficit:          
Preferred stock, $0.001 par value, 100,000,000 shares authorized          
Series A (20,000,000 shares designated, 13,992,340 shares issued and outstanding as of September 30, 2018 and June 30, 2018)   13,992    13,992 
Series B (30,000,000 shares designated, 1,327,640 shares issued and outstanding as of September 30, 2018 and June 30, 2018)   1,328    1,328 
Common stock, $0.0001 par value, 10,000,000,000 shares authorized: 26,953,95 shares issued and 13,379,492 shares outstanding as of September 30, 2018 and 23,212,549 shares issued and 9,376,441 outstanding at June 30, 2018 (See Note 6)   1,338    937 
Additional paid in capital   

40,658,655

    40,160,699 
Accumulated deficit   

(45,750,620

)   (44,691,196)
Total stockholders’ deficit   (5,075,307)   (4,514,240)
           
Total liabilities and stockholders’ deficit  $5,480   $11,412 

 

(1) Derived from audited financial statements

 

See Notes to Unaudited Financial Statements.

 

3
 

 

Visium Technologies, Inc.

STATEMENTS OF OPERATIONS

(Unaudited)

 

    Three Months Ended September 30,  
    2018     2017  
Net revenues   $ -     $ -  
                 
Operating expenses:                
Selling, general and administrative     437,027       119,987  
Total Operating Expenses     437,027       119,987  
                 
Loss from Operations     (437,027 )     (119,987 )
                 
Other income (expenses):                
Loss on change in fair value of derivative liabilities     (567,232 )     -  
Interest expense     (55,164 )     (100,413 )
Total other income (expenses)     (622,396 )     (100,413 )
                 
Net loss   $ (1,059,423 )   $ (220,400 )
                 
Loss per common share basic and diluted   $ (0.09 )   $ (0.35 )
                 
Weighted average common shares outstanding - basic and diluted     11,549,613       636,075  

 

See Notes to Unaudited Financial Statements.

 

4
 

 

Visium Technologies, Inc.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

    Three-months ended  
    September 30,  
    2018     2017  
Cash flows from operating activities:                
Net loss   $ (1,059,423 )   $ (220,400 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock based compensation     268,250       -  
Loss on change in derivative liabilities     567,232       -  
Amortization of debt discount     -       26,541  
Changes in operating assets and liabilities:                
Accounts payable     (15,955 )     22,500  
Accrued interest     55,164       73,871  
Accrued compensation     47,000       58,000  
Net cash used in operating activities     (137,732 )     (39,488 )
                 
Cash flows from financing activities:                

Repayment of due to officers

    (1,000 )     -  
Proceeds from sale of common stock     132,800       -  
Proceeds from issuance of short term notes payable     -       37,500  
                 
Net cash provided by financing activities     131,800       37,500  
                 
Net decrease in cash     (5,932 )     (1,988 )
                 
Cash, beginning of period     11,412       2,313  
                 
Cash, end of period   $ 5,480     $ 325  
                 
Supplemental disclosures of cash flow information:                
Cash paid for interest   $ -     $ -  
Cash paid for income taxes   $ -     $ -  
                 
Non-cash investing and financing activities:                
                 
Issuance of common stock for conversion of notes payable and accrued interest   $ 97,305     $ 40,030  

 

See Notes to Unaudited Financial Statements.

 

5
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

NOTE 1: ORGANIZATION, DESCRIPTION OF BUSINESS, GOING CONCERN AND BASIS OF PRESENTATION

 

Visium Technologies, Inc., or the Company, is currently 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, and the Internet of Things (“IOT”).

 

The Company named Henry J. Holcombe as its Chief Executive Officer in August 2018 to provide strategic expertise in pursuing its business plans.

 

On March 5, 2018 a majority of the common shareholders approved certain corporate actions, and the Company filed an amendment to its Articles of Incorporation with the State Department of Corporations in the State of Florida to effect the following changes, effective March 1, 2018:

 

(i) reverse the Common stock by a ratio of three thousand for one (3,000:1). The board of directors was authorized to implement the reverse stock split.
   
(ii) change the name of the Company to Visium Technologies, Inc. from Visium Energy Holdings, Inc.
   
(iii) amend our Amended and Restated Articles of Incorporation to designate Series AA Convertible Preferred Stock which provides that the Holder shall vote on all matters as a class with the holders of the Company’s Common Stock and shall be entitled to 51% of the common votes on any matters requiring a shareholder vote of the Company.

 

On September 4, 2018, the Company executed a definitive agreement to acquire Threat Surface Solutions Group, LLC, a cybersecurity company focused on network risk assessment, penetration testing, mobility security, and Internet of Things (“IoT”) security. On October 12, 2018, the Company completed the acquisition. See Note 10 – Subsequent Events.

 

Going Concern

 

The accompanying financial statements have been prepared on a going concern basis. For the three months ended September 30, 2018 we had a net loss of $1,059,423, had net cash used in operating activities of $137,732, and had negative working capital of $5,074,307. 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.

 

Basis of Presentation

 

The unaudited interim 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 financial statements should be read in conjunction with the Company’s audited financial statements for the year ended June 30, 2018, contained in the Company’s Annual Report on Form 10-K filed with the SEC on August 20, 2018. The results of operations for the three months ended September 30, 2018, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending June 30, 2019.

 

6
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018 

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of 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 the valuation of derivative liabilities, stock-based compensation, and deferred tax asset valuation allowance.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid, temporary, cash equivalents with an original maturity of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents during the three months ended September 30, 2018 and June 30, 2018.

 

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. During the three months ended September 30, 2018 and 2017, the Company had not reached a bank balance exceeding the FDIC insurance limit.

 

Derivative Liabilities

 

The Company assessed the potential classification of its derivative financial instruments as of September 30, 2018 and June 30, 2018, 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.

 

During the year ended June 30, 2017, the Company determined that there was no active market for the Company’s common stock, and because of this lack of liquidity and market value, there was no derivative liability associated with these convertible notes. 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 (e.g., Black-Scholes-Merton), the expected volatility, the implied risk-free interest rate, as well as the expected dividend rate, if any. The derivate liability that had previously been recognized was recorded as a gain through the change in fair value of derivative liability on the statement of operations as of June 30, 2017. During the three months ended September 30, 2018 the Company determined that there was an active market for the Company’s common stock, and there is, therefore, a derivative liability associated with certain of its convertible notes. The Company recorded a derivative liability as of September 30, 2018.

 

7
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

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 and cash equivalents, accounts payable and accrued expenses, accrued compensation, note and convertible promissory notes payable approximate their fair value due to the short maturity of these items.

 

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.

 

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.

 

8
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Income Taxes, continued

 

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 September 30, 2018, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2018 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, in any, would not be material in amount.

 

Share-Based Payments

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. 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.

 

In July 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, an accounting standard update to improve non-employee share-based payment accounting. The accounting standard update more closely aligns the accounting for employee and non-employee share based payments. The accounting standards update is effective as of the beginning of 2019 with early adoption permitted. We have elected to adopt this standard as of July 1, 2018, the beginning of our 2019 fiscal year.

 

The Company has elected to use the Black-Scholes-Merton, or BSM, option-pricing 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 segment, which is to search for possible acquisition targets and merge with an operating company. The Company’s chief operating decision-maker evaluates the performance of the Company based upon expenses by functional areas as disclosed in the Company’s statements of operations.

 

Recent Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The ASU replaces the prior lease accounting guidance in its entirety. The underlying principle of the new standard is the recognition of lease assets and lease liabilities by lessees for substantially all leases, with an exception for leases with terms of less than twelve months. The standard also requires additional quantitative and qualitative disclosures. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) - Land Easement Practical Expedient for Transition to Topic 842, which provides an optional transition practical expedient that allows companies to not evaluate (under Topic 842) existing or expired land easements that were not previously accounted for as leases (under Topic 840). Topic 842 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. Topic 842 requires a modified retrospective approach, which includes several optional practical expedients. The Company is currently evaluating the impact of ASU 2018-02 on the Company’s consolidated financial statements.

 

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). The objective of the ASU is to allow a reclassification from accumulated comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”) and will improve the usefulness of information reported to financial statement users. ASU 2018-02 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted.

 

9
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

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 dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method), and shares underlying convertible promissory notes and convertible preferred stock. Potential common shares includable in the computation of fully-diluted per-share results are not presented in the financial statements as their affect would be anti-dilutive.

 

The weighted-average potentially dilutive common share equivalents outstanding for the three months ended September 30, 2018 and 2017 are as follows:

 

    September 30,  
    2018     2017  
Series A Preferred Stock     113       113  
Series AA Convertible Preferred Stock     1       -  
Series B Preferred Stock     4       4  
Convertible notes payable     3,365,399       2,315,571  
Total     3,365,517       2,315,688  

 

10
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

NOTE 3: DERIVATIVE LIABILITY

 

The Company accounts for the embedded conversion features included in its convertible instruments as derivative liabilities. The aggregate fair value of derivative liabilities at September 30, 2018 and June 30, 2018 amounted to $567,232 and $0, respectively. For the three months ended September 30, 2018 and 2017, the Company recorded a loss related to the change in fair value of the derivative liability amounting to $567,232 and $0, respectively. Management had a change in accounting estimate during the year ended June 30, 2017. The Company determined that all of the underlying convertible notes were past due and in default, and that there was no active market for the Company’s common stock. Because of this lack of liquidity and market value, there was no derivative liability associated with these convertible notes as of June 30, 2017. During the three months ended September 30, 2018 the Company determined that there was an active market for the Company’s common stock, and there is, therefore, a derivative liability associated with certain of its convertible notes. The Company recorded a derivative liability as of September 30, 2018. At each measurement date, the fair value of the embedded conversion features was based on the Black-Scholes-Merton method using the following assumptions:

 

    Three Months Ended September 30,  
    2018     2017  
Effective exercise price   $ 0.124 - 0.137       -  
Effective market price   $ 0.47       -  
Volatility     784.39 %     -  
Risk-free interest     2.89 %     -  
Terms     30 days       -  
Expected dividend rate     0.00 %     -  

 

Changes in the derivative liabilities during the three months ended September 30, 2018 is follows:

 

Derivative liability at June 30, 2018   $ -  
Loss on change in fair value of derivative liability     567,232  
Derivative liability at September 30, 2018   $ 567,232  

 

NOTE 4: ACCRUED INTEREST PAYABLE

 

Changes in accrued interest payable during the three months ended September 30, is as follows:

 

Accrued interest payable at June 30, 2018  $1,686,054 
Interest expense for the three months ended September 30, 2018   55,164 
Conversion of accrued interest into common stock   (26,706)
Accrued interest payable at September 30, 2018  $1,714,512 

 

NOTE 5: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE

 

Convertible Notes Payable

 

At September 30, 2018 and June 30, 2018 convertible debentures consisted of the following:

 

   September,   June 30, 
   2018   2018 
Convertible notes payable  $1,547,384   $1,617,984 
Convertible notes payable to ASC Recap   147,965    147,965 
Total  $1,695,349   $1,765,949 

 

11
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018 

 

NOTE 5: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE, continued

 

The Company had convertible promissory notes aggregating approximately $1.7 million and $1.8 million at September 30, 2018 and June 30, 2018, respectively. The related accrued interest amounted to approximately $1.46 million and $1.44 million at September 30, 2018 and June 30, 2018, 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 $0.09 to $22,500 per share, as a result of the two reverse stock splits. At September 30, 2018, all $1.7 million of convertible promissory notes had matured, are in default and remain unpaid.

 

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 – Subsequent Events 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.

 

For the three months ended September 30, 2018, the following summarizes the conversion of debt for common shares:

 

              Conversion 
          Amount Converted   Price 
Date  Name  Shares Issued   Principal   Interest   Total   Per Share 
7/31/2018  DWIGHT POWER   111,111    10,000    0    10,000   $0.09 
8/2/2018  ROYAL PALM CONSULTING SERVICES LLC   431,116    18,100    20,700    38,800   $0.09 
9/13/2018  LANCE QUARTIERI   370,319    42,500    6,005    48,505    0.131 
                             
   Total   912,546   $70,600   $26,705   $97,305   $0.107 

 

Notes Payable

 

The Company had promissory notes aggregating $270,241 at September 30, 2018 and June 30, 2018, respectively. The related accrued interest amounted to approximately $251,000 and $245,000 at September 30, 2018 and June 30, 2018, 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 June 30, 2018 have matured, are in default, and remain unpaid.

 

NOTE 6: STOCKHOLDERS’ DEFICIT

 

Common Stock

 

At September 30, 2018, the Company had 10,000,000,000 authorized common shares.

 

Issuances of Common Stock During the Three Months Ended September 30, 2018

 

Convertible Notes Payable

 

During the three months ended September 30, 2018 the Company issued 912,5546 shares of its common stock related to the conversion of $97,305 of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.107 per share.

 

Sale of Restricted Common Stock

 

During the three months ended September 30, 2018 the Company issued 1,328,000 shares of its common stock related to the sale of its common stock resulting in proceeds of $132,800, at an average price of $0.10 per share.

 

12
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018 

 

NOTE 6: STOCKHOLDERS’ DEFICIT, continued

 

Stock Based Compensation

 

During the three months ended September 30, 2018 the Company issued 1,306,947 shares of its $0.0001 par value common stock as compensation to its directors and officers related to the vesting of restricted stock grants . The shares were valued at $239,250, or $0.183 per share.

 

During the three months ended September 30, 2018 the Company issued 483,336 shares of its $0.0001 par value common stock to four consultants, as compensation under four separate consulting agreements. The shares were valued at $29,000, or $0.06 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.

 

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

 

Prior to cancellation, the Series B Preferred Stock had a stated value of $5.00 per share. Each share of Series B Preferred Stock was convertible into 20 shares of the Company’s common stock. In addition, the holders of the preferred stock were entitled to receive annual cumulative dividends of 10% payable in cash or shares of the Company’s common stock, at the Company’s option. At March 31, 2018, the Company had not declared the payment of cumulative dividends aggregating approximately $673,200.

 

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.

 

13
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018 

 

Note 7 - STOCK-BASED COMPENSATION

 

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 three months ended September 30, 2018 and June 30, 2018 is presented in the following table:

 

   For the Year ended 
   September 30, 2018   June 30, 2018 
       Weighted       Weighted 
       Average       Average 
       Grant Date       Grant Date 
   Shares   Fair Value   Shares   Fair Value 
Unvested at beginning of period   13,836,108   $0.06         
Granted   500,000   $0.36    14,650,000    .06 
Vested   1,262,505   $0.07    813,8892    .06 
Unvested at end of period   13,573,603   $0.08    13,836,108    .06 

 

Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of September 30, 2018 was $1,006,083 and is expected to be recognized over a weighted average period of 2.83 years.

 

14
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

NOTE 8: RELATED PARTY TRANSACTIONS

 

Equity transactions with related parties are described in Note 6.

 

From time to time we have borrowed operating funds from Mr. Mark Lucky, our Chief Financial Officer and from certain Directors, for working capital. The advances were payable upon demand and were interest free. At September 30, 2018 there was $20,000 outstanding of such advances made to the Company.

 

NOTE 9: COMMITMENTS AND CONTINGENCIES

 

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 September 30, 2018, and based on the assessment there are no probable loss contingencies requiring accrual or disclosures within its financial statements.

 

The consideration payable to the sellers of Threat Surface Solutions Group, LLC includes up to $3.5 million as earnout consideration, which in contingent on the Company achieving mutually agreed-to revenue milestones. See Note 10 – Subsequent Events.

 

Legal Claims

 

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.

 

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.

 

15
 

 

VISIUM TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

NOTE 10: SUBSEQUENT EVENTS

 

On October 12, 2018, the Company completed the transaction to acquire Threat Surface Solutions Group, LLC (“TSSG”), pursuant to the Membership Interest Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, each Seller assigned, transferred and sold to Purchaser, and Purchaser purchased from such Sellers, all of the issued and outstanding voting membership interests of TSSG (collectively, the “Transaction”).

 

The total consideration for the transaction is approximately $5 million, with up to $3.5 million of that amount payable as earnout consideration based on mutually agreed-to revenue milestones. At the closing of the Transaction, Purchaser paid (i) 1,538,385 shares of its $0.0001 par value common stock, valued at $500,000, or $0.325 per share and (ii) a Seller’s note in the amount of $1 million dollars. The note is interest-only, has a 5-year term and is subject to the earnout provisions in the Agreement. Subject to funding, cash consideration of $1,000,000 will be payable post-Closing (the “Closing Consideration”).

 

On October 10, 2018, the Company appointed Dr, Emmanuel Esaka to as a member of the Board of Directors of the Company.

 

In October 2018 our officers, directors and consultants vested 441,669 shares of our $0.0001 par value common stock, at an average price per share of $0.072.

 

In October 2018 the Company issued 1,565,000 shares of our $0.0001 par value common stock in exchange for $156,500, or an average price of $0.10/share.

 

In October 2018 the Company issued 1,000,000 shares of our $0.0001 par value common stock to Dr. Emmanuel Esaka as compensation for serving as a Director. The shares were valued at $390,000, or $0.39/share.

 

16
 

 

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 based company 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 world-class cybersecurity/digital risk management company. Through our acquisition in October 2018 of Threat Surface Solutions Group, LLC (“TSSG”), we now deliver comprehensive solutions to protect connected devices such as IoT products, and Industrial IoT (“IIOT”) systems from penetration, mitigating the liability of manufacturers and protecting the consumer from possible catastrophic loss. Our focus is on test and measurement (“T&M”) test and evaluation (“T&E”), the cybersecurity of software and hardware platforms, and risk mitigation.

 

The TSSG acquisition provides us with capabilities of securing industrial systems from external penetration and internal threats through the use of our proprietary IoT test platform, the Cyber Automated Test Bench (“CATB”). Our patented cyber toolsets and our world-class T&M and T&E platforms provide a visualization of threats which allows for timely and effective remediation of technology risks.

 

In July 2018 Visium entered into a license agreement with George Mason University to commercialize and sell a network assessment and visualization tool that is backed by eight issued patents. This technology allows customers to collect and analyze large amounts of IT security data, discover and prioritize vulnerabilities, and take remedial actions.

 

Under the Agreement with George Mason University, the Company is required to make a first commercial sale of a “LICENSED PRODUCT” and/or a first commercial performance of a “LICENSED PROCESS,” as defined in the Agreement, on or before July 30, 2019. The 2019 minimum revenue target for the sale of products and services incorporating the GMRF technology is $100,000. This minimum revenue amount will increase in subsequent years. Also, within 30 days of the Effective date of the Agreement, the Company is required to pay GMRF a non-refundable license issue fee of $20,000, which was included in general and administrative expense on our statement of operations. Pursuant to the Agreement, the Company is required to pay to GMRF a running royalty of 5% of “NET SALES,” as defined in the Agreement.

 

Employees

 

At November 13, 2018, we had 3 full time employees.

 

Our principal offices are located at 11325 Random Hills Road, Suite 360, Fairfax, Virginia 22030. Our telephone number is (703) 225-3443.

 

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

 

17
 

 

VISIUM TECHNOLOGIES, INC.

RESULTS OF OPERATIONS

 

Discussion of Results for Three Month Period Ended September 30, 2018 and 2017

 

          Increase/     Increase/  
    Three-month period ended     (Decrease)     (Decrease)  
    September 30,     in $ 2018     in % 2018  
    2018     2017     vs 2017     vs 2017  
Operating expenses:                                
Selling, general and administrative   $ 437,027     $ 119,987     $ 317,040       264.2 %
Total operating expenses     437,027       119,987       317,040       264.2 %
                                 
Operating loss     (437,027 )     (119,987 )     (317,040     264.2 %
                                 
Other expense:                                
Gain on change in fair value of derivative liabilities     (567,232 )     -       (567,232 )     N/A   
Interest expense     (55,164 )     (100,413 )     45,249       45.1 %
      (622,396 )     (100,413 )     (521,983 )     (519.8 )%
                                 
Net loss   $ (1,059,423 )     (220,400 )   $ (839,023     380.7 %

 

Selling, General, and Administrative Expenses

 

For the three months ended September 30, 2018, selling, general and administrative expenses were $382,640 as compared to $119,987 for the three months ended September 30, 2017, an increase of $262,872 or approximately 86%. For the three months ended September 30, 2018 and 2017 selling, general and administrative expenses consisted of the following:

 

    Three months ended              
    September 30,     Increase/     %  
    2018     2017     (Decrease)     Change  
Accounting expense   $ 10,000     $ 12,500     $ (2,500 )     (20.0 )%
Consulting fees     25,000       43,500       (18,500 )     (42.5 %
Salaries     68,000       60,000       8,000       13.3  
Legal and professional fees     22,470       -       22,470       N/A  
Travel expense     94       -       94       N/A  
Occupancy expense     2,922       -       2,922       N/A  
Telephone expense     900       -       900       N/A  
Website expense     944       -       944       N/A  
Investor relations expense     10,000       -       10,000       N/A  
Stock based compensation     268,250       -       268,250       N/A  
Other     28,447       3,987       24,460       613.5 %
    $ 437,027     $ 119,987     $ 317,040       264.2 %

 

The increase in selling, general and administrative expenses during fiscal Q1 of 2018, when compared with the prior year, is primarily due to an increase in stock based compensation of $268,250, legal and professional fees of $22,470, investor relations expense of $10,000, occupancy expense of $2,922 and other expenses of $24,460 related to increased business development activity, offset by a decrease in accounting expense of $2,500, and consulting fees of $18,500.

 

We believe that our selling, general, and administrative expenses will increase as we increase our business activity over the remainder of 2018.

 

Interest Expense

 

   Three-Months Ended     
   September 30,   % 
   2018   2017   Change 
Interest expense  $55,164   $100,413   $45.1%

 

Interest expense represents stated interest of notes and convertible notes payable, along with the amortization of debt discount. The decrease in interest expense during the three-month period ended September 30, 2018 is primarily due to the decrease in interest bearing promissory notes during the three-month period ending September 30, 2018 when compared to the prior year period.

 

18
 

 

Liquidity and Capital Resources

 

   Balance at 
   September 30, 2018   June 30, 2018 
Cash  $5,480   $11,412 
Accounts payable and accrued expenses   610,628    626,583 
Accrued compensation   202,825    155,825 
Notes, convertible notes, and accrued interest payable  $3,680,103   $3,722,244 

 

At September 30, 2018 and June 30, 2018, our total assets consisted of cash.

 

We do not have any material commitments for capital expenditures.

 

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

 

We cannot ascertain that we have sufficient funds from operations to fund our ongoing operating requirements through June 30, 2019. We may need to raise funds to enhance our working capital and use them for strategic purposes. If such need arises, we intend to generate proceeds from either debt or equity financing.

 

We intend to finance our operations using a mix of equity and debt financing. We do not anticipate incurring capital expenditures for the foreseeable future. We anticipate that we will need to raise approximately $180,000 per year in the near term to finance the recurring costs of being a publicly-traded company. In the long-term, we anticipate we will need to raise a substantial amount of capital to complete an acquisition. We are unable to quantify the resources we will need to successfully complete an acquisition. If these funds cannot be obtained, we may not be able to consummate an acquisition or merger, and our business may fail as a result.

 

Going Concern

 

The accompanying financial statements have been prepared on a going concern basis. The Company has used net cash in its operating activities of approximately $137,732 and $39,488 during the thee-month periods ended September 30, 2018 and 2017, respectively, and has a working capital deficit of approximately $4.9 million and $4.5 million at September 30, 2018 and June 30, 2018, respectively. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future, once a merger with an operating company is consummated. Management plans may continue to provide for its capital requirements by issuing additional equity securities and debt and the Company will continue to find possible acquisition targets. The outcome of these matters cannot be predicted at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results.

 

19
 

 

Three months ended September 30, 2018

 

Net cash used in operations during the three months ended September 30, 2018 increased by $98,244 or 249% over the same period during fiscal year 2017. This cash was obtained through the sale of 1,328,000 shares of the Company’s $0.0001 par value common stock, value at $132,800.

 

Cash generated from financing activities consists of proceeds of $132,800 from the issuance of the Company’s common stock during the three-month period.

 

Three months ended September 30, 2017

 

Net cash used in operations during the three months ended September 30, 2017 decreased by $2,826 or 6.7% over the same period during fiscal year 2016. This cash was obtained through the sale of $37,500 of convertible promissory notes.

 

Cash generated from financing activities consists of proceeds of $37,500 from the issuance of convertible notes during the three-month period.

 

Capital Raising Transactions

 

During the three months ended September 30, 2018 we received proceeds of $132,800 from the sale of 1,328,000 shares of the Company’s $0.0001 par value common stock.

 

Other outstanding obligations at September 30, 2018

 

Convertible Notes Payable

 

The Company had convertible promissory notes aggregating $1.7 million outstanding at September 30, 2018. The accrued interest amounted to approximately $1.47 million as of September 30, 2018. 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 $0.09 and $0.60 per share, at the holders’ option. At September 30, 2018, all convertible promissory notes have matured.

 

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 $270,241 at September 30, 2018. The related accrued interest amounted to approximately $251,000 at September 30, 2018. 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 September 30, 2018.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

20
 

 

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 June 30, 2018. 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 September 30, 2018, 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 three 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 September 30, 2018.

 

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 September 30, 2018, 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.

 

21
 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

With the exception of the item described below, at September 30, 2018 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 28, 2018, 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 fiscal first quarter we sold 1,328,000 shares of common stock, valued at $132,800 to eight accredited investors, and 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 fiscal first quarter we issued 912,546 shares of common stock related to the conversion of $97,305 of convertible notes and accrued interest, to three accredited investors. 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 October 2018 we issued 1,538,385 shares of common stock related to the acquisition of Threat Surface Solutions Group, LLC. 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.

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

Not applicable to our operations.

 

Item 5. Other Information.

 

None

 

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 herein

 

22
 

 

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/ Henry J. Holcombe
November 14, 2018   Henry J. Holcombe
    CEO, principal executive officer
     
  By: /S/ Mark Lucky
November 14, 2018   Mark Lucky
    CFO, principal accounting officer

 

23
 

 

EX-31.1 2 ex31-1.htm

 

EXHIBIT 31.1

 

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

 

I, Henry J. Holcombe, certify that:

 

1. I have reviewed this Form 10-Q of Visium Technologies, Inc. for the period ended September 30, 2018;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

 

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

 

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(c) disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting.

 

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

 

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

 

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

 

Date: November 14, 2018

 

By: /s/ Henry J. Holcombe  
  Henry J. Holcombe  
  CEO, principal executive officer  

 

   
 

 

 

EX-31.2 3 ex31-2.htm

 

EXHIBIT 31.2

 

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

 

I, Mark Lucky, certify that:

 

1. I have reviewed this Form 10-Q of Visium Technologies, Inc. for the period ended September 30, 2018;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

 

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

 

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(c) disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting.

 

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

 

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

 

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

 

Date: November 14, 2018

 

By: /s/ Mark Lucky  
  Mark Lucky  
  Chief Financial Officer, principal financial and accounting officer  

 

 
 

 

 

EX-32.1 4 ex32-1.htm

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Visium Technologies, Inc. on Form 10-Q for the period ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof, I, Henry J. Holcombe, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

November 14, 2018

 

By: /s/ Henry J. Holcombe  
  Henry J. Holcombe  
  CEO, principal executive officer  

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
 

 

 

EX-32.2 5 ex32-2.htm

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Visium Technologies, Inc. on Form 10-Q for the period ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof, I, Mark Lucky, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

November 14, 2018

 

By: /s/ Mark Lucky  
  Mark Lucky  
  Chief Financial Officer, principal financial and accounting officer  

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
 

 

 

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Convertible Promissory Notes Two [Member] Convertible Promissory Notes One [Member] Convertible Promissory Notes Two [Member] Enterprise Solutions LLC [Member] Exchange of Convertible Notes Payable for Shares of Series A Convertible Preferred Stock [Member] Exchange of Outstanding Series B Preferred Shares for Series A Preferred Shares [Member] Exchange of Outstanding Series C Preferred Shares for Series A Preferred Shares [Member] Exchange of Outstanding Series I Preferred Shares for Series A Preferred Shares [Member] Exchange of Outstanding Series J Preferred Shares for Series A Preferred Shares [Member] Exchange of Outstanding Series Y Preferred Shares for Series A Preferred Shares [Member] Former Chairman of Board [Member] Four Consultants [Member] Four Investor [Member] Gain on Restructure of Troubled Convertible Notes [Member] Gold Coast Capital LLC [Member] Investor One [Member] Investor Two [Member] Issuance of Series F and Series H Preferred Stock in Exchange for Accrued Compensation [Member] January 27, 2017 [Member] Kathleen Roberton [Member] Kevin Yates [Member] Kevin Yates One [Member] Mark Lucky [Member] Mark Lucky One [Member] Minimum percentage of income tax benefit. Mr. Mark Lucky [Member] Mr. Tom Grbelja [Member] Ms Roberton [Member] Non Interest Bearing Convertible Promissory Note [Member] Paul Favata [Member] Preferred stock, shares designated. Preferred stock, stated value per share. Royal Palm Consulting Services LLC [Member] Series AA Convertible Preferred Stock [Member] Series AA Preferred Stock [Member] Series A Convertible Preferred Stock [Member] Series B Convertible Preferred Stock [Member] Series C, D, F, H, I, J, and Y [Member] Series I Preferred Stock [Member] Series J Preferred Stock [Member] Series Y Preferred Stock [Member] Ten Investor [Member] Thirteen Unsecured Convertible Promissory Note Agreements [Member] Three Investors [Member]. Twelve Convertible Noteholders [Member] 2001 Employee Compensation Plan [Member] Lance Quartieri [Member] Settlement Agreement [Member] Products and Services [Member] George Mason Research Foundation, Inc. [Member] Patent License Agreement [Member] Seven Accredited Investors [Member] Management and Consultants [Member] Directors [Member] Tom Grbelia [Member] Two Consultants [Member] Three Consultants [Member] Accredited Investor [Member] Common Stock One [Member] Employees andDirectors [Member] Mr. Kevin Yates [Member] Two NoteHolders [Member] New Tax Bill [Member] Issuance of common stock for conversion of notes payable and accrued interest. Schedule Of Changes In Accrued Interest Payable [Table Text Block] Fair value assumptions, measurement input, percentages. Fair value assumptions, measurement input, term. Fair value assumptions, measurement input, per share. Conversion of accrued interest into common stock. Dwight Power [Member] Conversion of debt principal amount. Conversion of debt interest amount. Directors and Officers [Member] Officers, Directors and Consultants [Member] Dr. Emmanuel Esaka [Member] Purchase Agreement [Member] Threat Surface Solutions Group, LLC [Member] Amount of earn out revenue milestones. Payment on cash consideration. Working capital deficit. Convertible Debt [Member] Assets, Current Assets Liabilities, Current Stockholders' Equity Attributable to Parent Liabilities and Equity Operating Expenses Operating Income (Loss) Interest Expense, Other Other Nonoperating Income (Expense) Weighted Average Number of Shares Outstanding, Basic and Diluted Increase (Decrease) in Interest Payable, Net Increase (Decrease) in Employee Related Liabilities Net Cash Provided by (Used in) Operating Activities Repayments of Related Party Debt Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Derivative, Loss on Derivative Derivative Liability [Default Label] Interest Payable Convertible Notes Payable, Noncurrent Convertible Debt Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares Share-based Compensation Arrangement by Share-based Payment Award, Option, Nonvested, Weighted Average Exercise Price EX-101.PRE 11 vism-20180930_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.10.0.1
Document and Entity Information - shares
3 Months Ended
Sep. 30, 2018
Nov. 13, 2018
Document And Entity Information    
Entity Registrant Name VISIUM TECHNOLOGIES, INC.  
Entity Central Index Key 0001082733  
Document Type 10-Q  
Document Period End Date Sep. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Ex Transition Period false  
Entity Common Stock, Shares Outstanding   17,924,545
Trading Symbol VISM  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2019  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.10.0.1
Balance Sheets - USD ($)
Sep. 30, 2018
Jun. 30, 2018
Current assets:    
Cash $ 5,480 $ 11,412
Total current assets 5,480 11,412
Total assets 5,480 11,412
Current liabilities:    
Accounts payable and accrued expenses 610,628 626,583
Accrued compensation 202,825 155,825
Accrued interest 1,714,512 1,686,054
Convertible notes payable to ASC Recap LLC 147,965 147,965
Convertible notes payable, net of discount of $0 and $542 1,547,384 1,617,984
Notes payable 270,241 270,241
Derivative liabilities 567,232
Due to officers 20,000 21,000
Total current liabilities 5,080,787 4,525,652
Commitments and Contingencies (Note 9)
Stockholders' deficit:    
Common stock, $0.0001 par value, 10,000,000,000 shares authorized: 26,953,95 shares issued and 13,379,492 shares outstanding as of September 30, 2018 and 23,212,549 shares issued and 9,376,441 outstanding at June 30, 2018 (See Note 6) 1,338 937
Additional paid in capital 40,658,655 40,160,699
Accumulated deficit (45,750,620) (44,691,196)
Total stockholders' deficit (5,075,307) (4,514,240)
Total liabilities and stockholders' deficit 5,480 11,412
Series A Preferred Stock [Member]    
Stockholders' deficit:    
Preferred stock, value 13,992 13,992
Series B Preferred Stock [Member]    
Stockholders' deficit:    
Preferred stock, value $ 1,328 $ 1,328
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.10.0.1
Balance Sheets (Parenthetical) - USD ($)
Sep. 30, 2018
Jun. 30, 2018
Convertible notes payable, net of discount $ 0 $ 542
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 10,000,000,000 10,000,000,000
Common stock, shares issued 2,695,395 23,212,549
Common stock, shares outstanding 13,379,492 9,376,441
Series A Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued 13,992,340 13,992,340
Preferred stock, shares outstanding 13,992,340 13,992,340
Series B Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 30,000,000 30,000,000
Preferred stock, shares issued 1,327,640 1,327,640
Preferred stock, shares outstanding 1,327,640 1,327,640
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.10.0.1
Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Income Statement [Abstract]    
Net revenues
Operating expenses:    
Selling, general and administrative 437,027 119,987
Total Operating Expenses 437,027 119,987
Loss from Operations (437,027) (119,987)
Other income (expenses):    
Loss on change in fair value of derivative liabilities (567,232)
Interest expense (55,164) (100,413)
Total other income (expenses) (622,396) (100,413)
Net loss $ (1,059,423) $ (220,400)
Loss per common share basic and diluted (0.09) (0.35)
Weighted average common shares outstanding - basic and diluted $ 11,549,613 $ 636,075
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.10.0.1
Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Cash flows from operating activities:    
Net loss $ (1,059,423) $ (220,400)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock based compensation 268,250
Loss on change in derivative liabilities 567,232
Amortization of debt discount 26,541
Changes in operating assets and liabilities:    
Accounts payable (15,955) 22,500
Accrued interest 55,164 73,871
Accrued compensation 47,000 58,000
Net cash used in operating activities (137,732) (39,488)
Cash flows from financing activities:    
Repayment of due to officers (1,000)
Proceeds from sale of common stock 132,800
Proceeds from issuance of short term notes payable 37,500
Net cash provided by financing activities 131,800 37,500
Net decrease in cash (5,932) (1,988)
Cash, beginning of period 11,412 2,313
Cash, end of period 5,480 325
Supplemental disclosures of cash flow information:    
Cash paid for interest
Cash paid for income taxes
Non-cash investing and financing activities:    
Issuance of common stock for conversion of notes payable and accrued interest $ 97,305 $ 40,030
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.10.0.1
Organization, Description of Business and Going Concern
3 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization, Description of Business, Going Concern and Basis of Presentation

NOTE 1: ORGANIZATION, DESCRIPTION OF BUSINESS, GOING CONCERN AND BASIS OF PRESENTATION

 

Visium Technologies, Inc., or the Company, is currently 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, and the Internet of Things (“IOT”).

 

The Company named Henry J. Holcombe as its Chief Executive Officer in August 2018 to provide strategic expertise in pursuing its business plans.

 

On March 5, 2018 a majority of the common shareholders approved certain corporate actions, and the Company filed an amendment to its Articles of Incorporation with the State Department of Corporations in the State of Florida to effect the following changes, effective March 1, 2018:

 

(i) reverse the Common stock by a ratio of three thousand for one (3,000:1). The board of directors was authorized to implement the reverse stock split.
   
(ii) change the name of the Company to Visium Technologies, Inc. from Visium Energy Holdings, Inc.
   
(iii) amend our Amended and Restated Articles of Incorporation to designate Series AA Convertible Preferred Stock which provides that the Holder shall vote on all matters as a class with the holders of the Company’s Common Stock and shall be entitled to 51% of the common votes on any matters requiring a shareholder vote of the Company.

 

On September 4, 2018, the Company executed a definitive agreement to acquire Threat Surface Solutions Group, LLC, a cybersecurity company focused on network risk assessment, penetration testing, mobility security, and Internet of Things (“IoT”) security. On October 12, 2018, the Company completed the acquisition. See Note 10 – Subsequent Events.

 

Going Concern

 

The accompanying financial statements have been prepared on a going concern basis. For the three months ended September 30, 2018 we had a net loss of $1,059,423, had net cash used in operating activities of $137,732, and had negative working capital of $5,074,307. 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.

 

Basis of Presentation

 

The unaudited interim 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 financial statements should be read in conjunction with the Company’s audited financial statements for the year ended June 30, 2018, contained in the Company’s Annual Report on Form 10-K filed with the SEC on August 20, 2018. The results of operations for the three months ended September 30, 2018, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending June 30, 2019.

XML 18 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies
3 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of 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 the valuation of derivative liabilities, stock-based compensation, and deferred tax asset valuation allowance.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid, temporary, cash equivalents with an original maturity of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents during the three months ended September 30, 2018 and June 30, 2018.

 

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. During the three months ended September 30, 2018 and 2017, the Company had not reached a bank balance exceeding the FDIC insurance limit.

 

Derivative Liabilities

 

The Company assessed the potential classification of its derivative financial instruments as of September 30, 2018 and June 30, 2018, 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.

 

During the year ended June 30, 2017, the Company determined that there was no active market for the Company’s common stock, and because of this lack of liquidity and market value, there was no derivative liability associated with these convertible notes. 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 (e.g., Black-Scholes-Merton), the expected volatility, the implied risk-free interest rate, as well as the expected dividend rate, if any. The derivate liability that had previously been recognized was recorded as a gain through the change in fair value of derivative liability on the statement of operations as of June 30, 2017. During the three months ended September 30, 2018 the Company determined that there was an active market for the Company’s common stock, and there is, therefore, a derivative liability associated with certain of its convertible notes. The Company recorded a derivative liability as of September 30, 2018.

 

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 and cash equivalents, accounts payable and accrued expenses, accrued compensation, note and convertible promissory notes payable approximate their fair value due to the short maturity of these items.

 

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.

 

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 September 30, 2018, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2018 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, in any, would not be material in amount.

 

Share-Based Payments

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. 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.

 

In July 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, an accounting standard update to improve non-employee share-based payment accounting. The accounting standard update more closely aligns the accounting for employee and non-employee share based payments. The accounting standards update is effective as of the beginning of 2019 with early adoption permitted. We have elected to adopt this standard as of July 1, 2018, the beginning of our 2019 fiscal year.

 

The Company has elected to use the Black-Scholes-Merton, or BSM, option-pricing 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 segment, which is to search for possible acquisition targets and merge with an operating company. The Company’s chief operating decision-maker evaluates the performance of the Company based upon expenses by functional areas as disclosed in the Company’s statements of operations.

 

Recent Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The ASU replaces the prior lease accounting guidance in its entirety. The underlying principle of the new standard is the recognition of lease assets and lease liabilities by lessees for substantially all leases, with an exception for leases with terms of less than twelve months. The standard also requires additional quantitative and qualitative disclosures. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) - Land Easement Practical Expedient for Transition to Topic 842, which provides an optional transition practical expedient that allows companies to not evaluate (under Topic 842) existing or expired land easements that were not previously accounted for as leases (under Topic 840). Topic 842 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. Topic 842 requires a modified retrospective approach, which includes several optional practical expedients. The Company is currently evaluating the impact of ASU 2018-02 on the Company’s consolidated financial statements.

 

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). The objective of the ASU is to allow a reclassification from accumulated comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”) and will improve the usefulness of information reported to financial statement users. ASU 2018-02 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted.

 

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 dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method), and shares underlying convertible promissory notes and convertible preferred stock. Potential common shares includable in the computation of fully-diluted per-share results are not presented in the financial statements as their affect would be anti-dilutive.

 

The weighted-average potentially dilutive common share equivalents outstanding for the three months ended September 30, 2018 and 2017 are as follows:

 

    September 30,  
    2018     2017  
Series A Preferred Stock     113       113  
Series AA Convertible Preferred Stock     1       -  
Series B Preferred Stock     4       4  
Convertible notes payable     3,365,399       2,315,571  
Total     3,365,517       2,315,688  

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liability
3 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Liability

NOTE 3: DERIVATIVE LIABILITY

 

The Company accounts for the embedded conversion features included in its convertible instruments as derivative liabilities. The aggregate fair value of derivative liabilities at September 30, 2018 and June 30, 2018 amounted to $567,232 and $0, respectively. For the three months ended September 30, 2018 and 2017, the Company recorded a loss related to the change in fair value of the derivative liability amounting to $567,232 and $0, respectively. Management had a change in accounting estimate during the year ended June 30, 2017. The Company determined that all of the underlying convertible notes were past due and in default, and that there was no active market for the Company’s common stock. Because of this lack of liquidity and market value, there was no derivative liability associated with these convertible notes as of June 30, 2017. During the three months ended September 30, 2018 the Company determined that there was an active market for the Company’s common stock, and there is, therefore, a derivative liability associated with certain of its convertible notes. The Company recorded a derivative liability as of September 30, 2018. At each measurement date, the fair value of the embedded conversion features was based on the Black-Scholes-Merton method using the following assumptions:

 

    Three Months Ended September 30,  
    2018     2017  
Effective exercise price   $ 0.124 - 0.137       -  
Effective market price   $ 0.47       -  
Volatility     784.39 %     -  
Risk-free interest     2.89 %     -  
Terms     30 days       -  
Expected dividend rate     0.00 %     -  

 

Changes in the derivative liabilities during the three months ended September 30, 2018 is follows:

 

Derivative liability at June 30, 2018   $ -  
Loss on change in fair value of derivative liability     567,232  
Derivative liability at September 30, 2018   $ 567,232  

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Interest Payable
3 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
Accrued Interest Payable

NOTE 4: ACCRUED INTEREST PAYABLE

 

Changes in accrued interest payable during the three months ended September 30, is as follows:

 

Accrued interest payable at June 30, 2018   $ 1,686,054  
Interest expense for the three months ended September 30, 2018     55,164  
Conversion of accrued interest into common stock     (26,706 )
Accrued interest payable at September 30, 2018   $ 1,714,512

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
Convertible Notes Payable and Note Payable
3 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Convertible Notes Payable and Note Payable

NOTE 5: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE

 

Convertible Notes Payable

 

At September 30, 2018 and June 30, 2018 convertible debentures consisted of the following:

 

    September,     June 30,  
    2018     2018  
Convertible notes payable   $ 1,547,384     $ 1,617,984  
Convertible notes payable to ASC Recap     147,965       147,965  
Total   $ 1,695,349     $ 1,765,949  

 

The Company had convertible promissory notes aggregating approximately $1.7 million and $1.8 million at September 30, 2018 and June 30, 2018, respectively. The related accrued interest amounted to approximately $1.46 million and $1.44 million at September 30, 2018 and June 30, 2018, 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 $0.09 to $22,500 per share, as a result of the two reverse stock splits. At September 30, 2018, all $1.7 million of convertible promissory notes had matured, are in default and remain unpaid.

 

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 – Subsequent Events 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.

 

For the three months ended September 30, 2018, the following summarizes the conversion of debt for common shares:

 

                    Conversion  
              Amount Converted     Price  
Date   Name   Shares Issued     Principal     Interest     Total     Per Share  
7/31/2018   DWIGHT POWER     111,111       10,000       0       10,000     $ 0.09  
8/2/2018   ROYAL PALM CONSULTING SERVICES LLC     431,116       18,100       20,700       38,800     $ 0.09  
9/13/2018   LANCE QUARTIERI     370,319       42,500       6,005       48,505       0.131  
                                             
    Total     912,546     $ 70,600     $ 26,705     $ 97,305     $ 0.107  

 

Notes Payable

 

The Company had promissory notes aggregating $270,241 at September 30, 2018 and June 30, 2018, respectively. The related accrued interest amounted to approximately $251,000 and $245,000 at September 30, 2018 and June 30, 2018, 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 June 30, 2018 have matured, are in default, and remain unpaid.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stockholders' Deficit
3 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Stockholders' Deficit

NOTE 6: STOCKHOLDERS’ DEFICIT

 

Common Stock

 

At September 30, 2018, the Company had 10,000,000,000 authorized common shares.

 

Issuances of Common Stock During the Three Months Ended September 30, 2018

 

Convertible Notes Payable

 

During the three months ended September 30, 2018 the Company issued 912,5546 shares of its common stock related to the conversion of $97,305 of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.107 per share.

 

Sale of Restricted Common Stock

 

During the three months ended September 30, 2018 the Company issued 1,328,000 shares of its common stock related to the sale of its common stock resulting in proceeds of $132,800, at an average price of $0.10 per share.

 

Stock Based Compensation

 

During the three months ended September 30, 2018 the Company issued 1,306,947 shares of its $0.0001 par value common stock as compensation to its directors and officers related to the vesting of restricted stock grants . The shares were valued at $239,250, or $0.183 per share.

 

During the three months ended September 30, 2018 the Company issued 483,336 shares of its $0.0001 par value common stock to four consultants, as compensation under four separate consulting agreements. The shares were valued at $29,000, or $0.06 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.

 

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

 

Prior to cancellation, the Series B Preferred Stock had a stated value of $5.00 per share. Each share of Series B Preferred Stock was convertible into 20 shares of the Company’s common stock. In addition, the holders of the preferred stock were entitled to receive annual cumulative dividends of 10% payable in cash or shares of the Company’s common stock, at the Company’s option. At March 31, 2018, the Company had not declared the payment of cumulative dividends aggregating approximately $673,200.

 

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.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock-Based Compensation
3 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation

Note 7 - STOCK-BASED COMPENSATION

 

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 three months ended September 30, 2018 and June 30, 2018 is presented in the following table:

 

    For the Year ended  
    September 30, 2018     June 30, 2018  
          Weighted           Weighted  
          Average           Average  
          Grant Date           Grant Date  
    Shares     Fair Value     Shares     Fair Value  
Unvested at beginning of period     13,836,108     $ 0.06              
Granted     500,000     $ 0.36       14,650,000       .06  
Vested     1,262,505     $ 0.07       813,8892       .06  
Unvested at end of period     13,573,603     $ 0.08       13,836,108       .06  

 

Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of September 30, 2018 was $1,006,083 and is expected to be recognized over a weighted average period of 2.83 years.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Transactions
3 Months Ended
Sep. 30, 2018
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 8: RELATED PARTY TRANSACTIONS

 

Equity transactions with related parties are described in Note 6.

 

From time to time we have borrowed operating funds from Mr. Mark Lucky, our Chief Financial Officer and from certain Directors, for working capital. The advances were payable upon demand and were interest free. At September 30, 2018 there was $20,000 outstanding of such advances made to the Company.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies
3 Months Ended
Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 9: COMMITMENTS AND CONTINGENCIES

 

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 September 30, 2018, and based on the assessment there are no probable loss contingencies requiring accrual or disclosures within its financial statements.

 

The consideration payable to the sellers of Threat Surface Solutions Group, LLC includes up to $3.5 million as earnout consideration, which in contingent on the Company achieving mutually agreed-to revenue milestones. See Note 10 – Subsequent Events.

 

Legal Claims

 

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.

 

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.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Subsequent Events
3 Months Ended
Sep. 30, 2018
Subsequent Events [Abstract]  
Subsequent Events

NOTE 10: SUBSEQUENT EVENTS

 

On October 12, 2018, the Company completed the transaction to acquire Threat Surface Solutions Group, LLC (“TSSG”), pursuant to the Membership Interest Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, each Seller assigned, transferred and sold to Purchaser, and Purchaser purchased from such Sellers, all of the issued and outstanding voting membership interests of TSSG (collectively, the “Transaction”).

 

The total consideration for the transaction is approximately $5 million, with up to $3.5 million of that amount payable as earnout consideration based on mutually agreed-to revenue milestones. At the closing of the Transaction, Purchaser paid (i) 1,538,385 shares of its $0.0001 par value common stock, valued at $500,000, or $0.325 per share and (ii) a Seller’s note in the amount of $1 million dollars. The note is interest-only, has a 5-year term and is subject to the earnout provisions in the Agreement. Subject to funding, cash consideration of $1,000,000 will be payable post-Closing (the “Closing Consideration”).

 

On October 10, 2018, the Company appointed Dr, Emmanuel Esaka to as a member of the Board of Directors of the Company.

 

In October 2018 our officers, directors and consultants vested 441,669 shares of our $0.0001 par value common stock, at an average price per share of $0.072.

 

In October 2018 the Company issued 1,565,000 shares of our $0.0001 par value common stock in exchange for $156,500, or an average price of $0.10/share.

 

In October 2018 the Company issued 1,000,000 shares of our $0.0001 par value common stock to Dr. Emmanuel Esaka as compensation for serving as a Director. The shares were valued at $390,000, or $0.39/share.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Use of Estimates

Use of Estimates

 

The preparation of 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 the valuation of derivative liabilities, stock-based compensation, and deferred tax asset valuation allowance.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all highly liquid, temporary, cash equivalents with an original maturity of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents during the three months ended September 30, 2018 and June 30, 2018.

Concentration of Credit Risks

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. During the three months ended September 30, 2018 and 2017, the Company had not reached a bank balance exceeding the FDIC insurance limit.

Derivative Liabilities

Derivative Liabilities

 

The Company assessed the potential classification of its derivative financial instruments as of September 30, 2018 and June 30, 2018, 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.

 

During the year ended June 30, 2017, the Company determined that there was no active market for the Company’s common stock, and because of this lack of liquidity and market value, there was no derivative liability associated with these convertible notes. 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 (e.g., Black-Scholes-Merton), the expected volatility, the implied risk-free interest rate, as well as the expected dividend rate, if any. The derivate liability that had previously been recognized was recorded as a gain through the change in fair value of derivative liability on the statement of operations as of June 30, 2017. During the three months ended September 30, 2018 the Company determined that there was an active market for the Company’s common stock, and there is, therefore, a derivative liability associated with certain of its convertible notes. The Company recorded a derivative liability as of September 30, 2018.

Fair Value of Financial Instruments

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 and cash equivalents, accounts payable and accrued expenses, accrued compensation, note and convertible promissory notes payable approximate their fair value due to the short maturity of these items.

Convertible Instruments

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.

Income Taxes

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 September 30, 2018, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2018 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, in any, would not be material in amount.

Share-Based Payment

Share-Based Payments

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. 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.

 

In July 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, an accounting standard update to improve non-employee share-based payment accounting. The accounting standard update more closely aligns the accounting for employee and non-employee share based payments. The accounting standards update is effective as of the beginning of 2019 with early adoption permitted. We have elected to adopt this standard as of July 1, 2018, the beginning of our 2019 fiscal year.

 

The Company has elected to use the Black-Scholes-Merton, or BSM, option-pricing 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

Segment Reporting

 

The Company operates in one segment, which is to search for possible acquisition targets and merge with an operating company. The Company’s chief operating decision-maker evaluates the performance of the Company based upon expenses by functional areas as disclosed in the Company’s statements of operations.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The ASU replaces the prior lease accounting guidance in its entirety. The underlying principle of the new standard is the recognition of lease assets and lease liabilities by lessees for substantially all leases, with an exception for leases with terms of less than twelve months. The standard also requires additional quantitative and qualitative disclosures. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) - Land Easement Practical Expedient for Transition to Topic 842, which provides an optional transition practical expedient that allows companies to not evaluate (under Topic 842) existing or expired land easements that were not previously accounted for as leases (under Topic 840). Topic 842 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. Topic 842 requires a modified retrospective approach, which includes several optional practical expedients. The Company is currently evaluating the impact of ASU 2018-02 on the Company’s consolidated financial statements.

 

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). The objective of the ASU is to allow a reclassification from accumulated comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”) and will improve the usefulness of information reported to financial statement users. ASU 2018-02 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted.

Basic and Diluted Earnings Per Share

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 dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method), and shares underlying convertible promissory notes and convertible preferred stock. Potential common shares includable in the computation of fully-diluted per-share results are not presented in the financial statements as their affect would be anti-dilutive.

 

The weighted-average potentially dilutive common share equivalents outstanding for the three months ended September 30, 2018 and 2017 are as follows:

 

    September 30,  
    2018     2017  
Series A Preferred Stock     113       113  
Series AA Convertible Preferred Stock     1       -  
Series B Preferred Stock     4       4  
Convertible notes payable     3,365,399       2,315,571  
Total     3,365,517       2,315,688

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Summary of Weighted-average Anti-dilutive Common Share Equivalents

The weighted-average potentially dilutive common share equivalents outstanding for the three months ended September 30, 2018 and 2017 are as follows:

 

    September 30,  
    2018     2017  
Series A Preferred Stock     113       113  
Series AA Convertible Preferred Stock     1       -  
Series B Preferred Stock     4       4  
Convertible notes payable     3,365,399       2,315,571  
Total     3,365,517       2,315,688

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liability (Tables)
3 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivative Liabilities at Fair Value, Valuation Assumptions

At each measurement date, the fair value of the embedded conversion features was based on the Black-Scholes-Merton method using the following assumptions:

 

    Three Months Ended September 30,  
    2018     2017  
Effective exercise price   $ 0.124 - 0.137       -  
Effective market price   $ 0.47       -  
Volatility     784.39 %     -  
Risk-free interest     2.89 %     -  
Terms     30 days       -  
Expected dividend rate     0.00 %     -  

Schedule of Changes in Derivative Liabilities

Changes in the derivative liabilities during the three months ended September 30, 2018 is follows:

 

Derivative liability at June 30, 2018   $ -  
Loss on change in fair value of derivative liability     567,232  
Derivative liability at September 30, 2018   $ 567,232  

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Interest Payable (Tables)
3 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
Schedule of Changes in Accrued Interest Payable

Changes in accrued interest payable during the three months ended September 30, is as follows:

 

Accrued interest payable at June 30, 2018   $ 1,686,054  
Interest expense for the three months ended September 30, 2018     55,164  
Conversion of accrued interest into common stock     (26,706 )
Accrued interest payable at September 30, 2018   $ 1,714,512

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Convertible Notes Payable and Note Payable (Tables)
3 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Schedule of Convertible Debenture

At September 30, 2018 and June 30, 2018 convertible debentures consisted of the following:

 

    September,     June 30,  
    2018     2018  
Convertible notes payable   $ 1,547,384     $ 1,617,984  
Convertible notes payable to ASC Recap     147,965       147,965  
Total   $ 1,695,349     $ 1,765,949  

Schedule of Conversion of Debt for Common Shares

For the three months ended September 30, 2018, the following summarizes the conversion of debt for common shares:

 

                    Conversion  
              Amount Converted     Price  
Date   Name   Shares Issued     Principal     Interest     Total     Per Share  
7/31/2018   DWIGHT POWER     111,111       10,000       0       10,000     $ 0.09  
8/2/2018   ROYAL PALM CONSULTING SERVICES LLC     431,116       18,100       20,700       38,800     $ 0.09  
9/13/2018   LANCE QUARTIERI     370,319       42,500       6,005       48,505       0.131  
                                             
    Total     912,546     $ 70,600     $ 26,705     $ 97,305     $ 0.107  

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock-Based Compensation (Tables)
3 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Restricted Stock Activity

A summary of the Company’s restricted stock activity for the three months ended September 30, 2018 and June 30, 2018 is presented in the following table:

 

    For the Year ended  
    September 30, 2018     June 30, 2018  
          Weighted           Weighted  
          Average           Average  
          Grant Date           Grant Date  
    Shares     Fair Value     Shares     Fair Value  
Unvested at beginning of period     13,836,108     $ 0.06              
Granted     500,000     $ 0.36       14,650,000       .06  
Vested     1,262,505     $ 0.07       813,8892       .06  
Unvested at end of period     13,573,603     $ 0.08       13,836,108       .06  

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
Organization, Description of Business, Going Concern and Basis of Presentation (Details Narrative) - USD ($)
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Reverse stock split A ratio of three thousand for one (3,000:1).  
Common stock voting rights The Holder shall vote on all matters as a class with the holders of the Company's Common Stock and shall be entitled to 51% of the common votes on any matters requiring a shareholder vote of the Company.  
Net loss $ 1,059,423 $ 220,400
Net cash used in operating activities 137,732 $ 39,488
Working capital deficit $ 5,074,307  
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details Narrative)
3 Months Ended
Sep. 30, 2018
USD ($)
Integer
Jun. 30, 2018
USD ($)
Accounting Policies [Abstract]    
Cash equivalents
Maximum Cash, FDIC insured amount $ 250,000  
Minimum percentage of income tax benefit 50.00%  
Number of operating segment | Integer 1  
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary Of Significant Accounting Policies - Summary of Weighted-average Anti-dilutive Common Share Equivalents (Details) - shares
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Anti-dilutive common shares equivalents 3,365,517 2,315,688
Series A Preferred Stock [Member]    
Anti-dilutive common shares equivalents 113 113
Series AA Convertible Preferred Stock [Member]    
Anti-dilutive common shares equivalents 1
Series B Preferred Stock [Member]    
Anti-dilutive common shares equivalents 4 4
Convertible Notes Payable [Member]    
Anti-dilutive common shares equivalents 3,365,399 2,315,571
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liability (Details Narrative) - USD ($)
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Jun. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]      
Fair value of derivative liabilities $ 567,232   $ 0
Loss on change in fair value of derivative liabilities $ 567,232 $ 0  
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liability - Schedule of Derivative Liabilities at Fair Value, Valuation Assumptions (Details) - $ / shares
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Effective Market price $ 0.47  
Effective Exercise Price [Member]    
Fair value assumptions, measurement input, per share  
Effective Exercise Price [Member] | Minimum [Member]    
Fair value assumptions, measurement input, per share 0.124  
Effective Exercise Price [Member] | Maximum [Member]    
Fair value assumptions, measurement input, per share $ 0.137  
Volatility [Member]    
Fair value assumptions, measurement input, percentages 784.39%
Risk Free Interest [Member]    
Fair value assumptions, measurement input, percentages 2.89%
Term [Member]    
Fair value assumptions, measurement input, term 30 days 0 days
Expected Dividend Rate [Member]    
Fair value assumptions, measurement input, percentages 0.00%
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liability - Schedule of Changes in Derivative Liabilities (Details) - USD ($)
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]    
Derivative liabilities  
Loss on change in fair value of derivative liability 567,232
Derivative liabilities $ 567,232  
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Interest Payable - Schedule of Changes in Accrued Interest Payable (Details)
3 Months Ended
Sep. 30, 2018
USD ($)
Payables and Accruals [Abstract]  
Accrued interest payable, Beginning Period $ 1,686,054
Interest expense 55,164
Conversion of accrued interest into common stock (26,706)
Accrued interest payable, Ending Period $ 1,714,512
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
Convertible Notes Payable and Note Payable (Details Narrative) - USD ($)
May 06, 2014
Jul. 22, 2013
Sep. 30, 2018
Jun. 30, 2018
Convertible notes payable     $ 1,700,000 $ 1,800,000
Accrued interest     $ 1,460,000 1,440,000
Convertible debt instrument conversion price per share     $ 0.107  
Convertible promissory notes default and remain unpaid     $ 1,700,000  
Promissory notes amount     $ 270,241 270,241
Convertible Notes Payable [Member] | Minimum [Member]        
Debt instrument interest rate percentage     0.00%  
Convertible debt instrument conversion price per share     $ 0.09  
Convertible Notes Payable [Member] | Maximum [Member]        
Debt instrument interest rate percentage     18.00%  
Convertible debt instrument conversion price per share     $ 22,500  
Convertible Promissory Notes One [Member] | ASC Recap, LLC [Member]        
Convertible promissory notes default and remain unpaid   $ 22,965    
Debt instrument face amount   $ 25,000    
Debt instrument maturity date   Mar. 31, 2014    
Debt convertible into common stock conversion price rate   50.00%    
Convertible Promissory Notes Two [Member] | ASC Recap, LLC [Member]        
Debt instrument face amount $ 125,000      
Debt instrument maturity date May 06, 2016      
Debt convertible into common stock conversion price rate 50.00%      
Convertible Promissory Notes Two [Member] | Minimum [Member] | ASC Recap, LLC [Member]        
Convertible debt instrument conversion price per share $ 0.15      
Convertible Promissory Notes Two [Member] | Maximum [Member] | ASC Recap, LLC [Member]        
Convertible debt instrument conversion price per share $ 0.30      
Notes Payable [Member]        
Accrued interest     $ 251,000 $ 245,000
Notes Payable [Member] | Minimum [Member]        
Debt instrument interest rate percentage       0.00%
Notes Payable [Member] | Maximum [Member]        
Debt instrument interest rate percentage       16.00%
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Convertible Notes Payable and Note Payable - Schedule of Convertible Debenture (Details) - USD ($)
Sep. 30, 2018
Jun. 30, 2018
Debt Disclosure [Abstract]    
Convertible notes payable $ 1,547,384 $ 1,617,984
Convertible notes payable to ASC Recap 147,965 147,965
Total $ 1,695,349 $ 1,765,949
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
Convertible Notes Payable and Note Payable - Schedule of Conversion of Debt for Common Shares (Details) - USD ($)
3 Months Ended
Sep. 13, 2018
Aug. 02, 2018
Jul. 31, 2018
Sep. 30, 2018
Shares Issued       912,546
Amount Converted Principal       $ 70,600
Amount Converted Interest       26,705
Amount Converted Total       $ 97,305
Conversion Price Per Share       $ 0.107
Dwight Power [Member]        
Shares Issued     111,111  
Amount Converted Principal     $ 10,000  
Amount Converted Interest     0  
Amount Converted Total     $ 10,000  
Conversion Price Per Share     $ 0.09  
Royal Palm Consulting Services LLC [Member]        
Shares Issued   431,116    
Amount Converted Principal   $ 18,100    
Amount Converted Interest   20,700    
Amount Converted Total   $ 38,800    
Conversion Price Per Share   $ 0.09    
Lance Quartieri [Member]        
Shares Issued 370,319      
Amount Converted Principal $ 42,500      
Amount Converted Interest 6,005      
Amount Converted Total $ 48,505      
Conversion Price Per Share $ 0.131      
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stockholders' Deficit (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Mar. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Apr. 30, 2016
Common stock authorized shares   10,000,000,000 10,000,000,000  
Number of common stock issued for conversion of convertible notes, shares   912,546    
Number of common stock issued for conversion of convertible notes, value   $ 97,305    
Convertible common stock conversion, price per share   $ 0.107    
Common stock, par value   0.0001 $ 0.0001  
Series A Convertible Preferred Stock [Member]        
Share issued price per shares   0.10    
Preferred stock, par value   0.001    
Preferred stock, stated value per share   $ 750.00    
Stock conversion description   Each one share of Series A Preferred Stock is convertible into one (1) share of Common Stock.    
Convertible preferred stock, conversion price   $ 0.035    
Series B Convertible Preferred Stock [Member]        
Common stock, par value       $ 0.001
Preferred stock, par value   $ 5.00   0.001
Preferred stock, stated value per share       $ 375
Convertible preferred stock number of shares issued upon conversion   20   300
Preferred stock, shares designated       30,000,000
Preferred stock, cumulative dividends   10.00%    
Aggregate dividends payable $ 673,200      
Series AA Convertible Preferred Stock [Member]        
Stock conversion description Each one share of Series AA Convertible Preferred Stock is convertible into one (1) share of Common Stock.      
Preferred stock voting percentage 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.      
Restricted Shares [Member]        
Stock issued during period, shares, restricted stock   1,328,000    
Stock issued during period, value, restricted stock   $ 132,800    
Share issued price per shares   $ 0.10    
Common Stock [Member] | Series B Convertible Preferred Stock [Member]        
Convertible preferred stock number of shares issued upon conversion       1
Directors and Officers [Member]        
Share issued price per shares   $ 0.183    
Number common stock issued as compensation   1,306,947    
Common stock, par value   $ 0.0001    
Number common stock issued as compensation, value   $ 239,250    
Four Consultants [Member]        
Share issued price per shares   $ 0.06    
Number common stock issued as compensation   483,336    
Common stock, par value   $ 0.0001    
Number common stock issued as compensation, value   $ 29,000    
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock-Based Compensation (Details Narrative) - Restricted Shares [Member] - Employees and Directors [Member]
3 Months Ended
Sep. 30, 2018
USD ($)
Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors $ 1,006,083
Share based compensation outstanding, weighted average contractual term 2 years 9 months 29 days
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock-Based Compensation - Schedule of Restricted Stock Activity (Details) - $ / shares
3 Months Ended 12 Months Ended
Sep. 30, 2018
Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]    
Unvested at beginning of period 13,836,108
Granted 500,000 14,650,000
Vested 1,262,505 8,138,892
Unvested at end of period 13,573,603 13,836,108
Weighted Average Grant Date Fair Value Unvested at beginning of period $ 0.06
Weighted Average Grant Date Fair Value Granted 0.36 0.06
Weighted Average Grant Date Fair Value Vested 0.07 0.06
Weighted Average Grant Date Fair Value Unvested at end of period $ 0.08 $ 0.06
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Transactions (Details Narrative) - USD ($)
Sep. 30, 2018
Jun. 30, 2018
Related Party Transactions [Abstract]    
Due to officer $ 20,000 $ 21,000
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies (Details Narrative)
3 Months Ended
Sep. 30, 2018
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Amount of earnout revenue milestones $ 350,000
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
Subsequent Events (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Oct. 12, 2018
Oct. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Amount of earn out revenue milestones     $ 350,000  
Common stock, par value     $ 0.0001 $ 0.0001
Number common stock issued as compensation     1,262,505 8,138,892
Subsequent Event [Member]        
Common stock, par value   $ 0.0001    
Share issued price per shares   $ 0.10    
Issuance of common stock, shares   1,565,000    
Issuance of common stock, value   $ 156,500    
Subsequent Event [Member] | Officers, Directors and Consultants [Member]        
Common stock, par value   $ 0.0001    
Share issued price per shares   $ 0.072    
Number common stock issued as compensation   441,669    
Subsequent Event [Member] | Dr. Emmanuel Esaka [Member]        
Common stock, par value   $ 0.0001    
Share issued price per shares   $ 0.39    
Issuance of common stock for services, shares   1,000,000    
Issuance of common stock for services, value   $ 390,000    
Subsequent Event [Member] | Purchase Agreement [Member] | Threat Surface Solutions Group, LLC [Member]        
Amount of consideration transferred $ 500,000      
Amount of earn out revenue milestones $ 350,000      
Stock issued during period, shares, acquisitions 1,538,385      
Stock issued during period, value, acquisitions $ 500,000      
Common stock, par value $ 0.0001      
Share issued price per shares $ 0.325      
Note face amount $ 1,000,000      
Maturity of note 5 years      
Payment on cash consideration $ 1,000,000      
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