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Item 7. Management’s Discussion and Analysis

2024-09-30 compared with 2023-10-06 · 46 added, 33 removed, 200 unchanged (28% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read in conjunction with our financial statements and accompanying notes included in this Annual Report on Form 10-K.

The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto.

The management's discussion and analysis contain forward-looking statements, such as statements of our plans, objectives, expectations, and intentions.

Any statements that are not statements of historical fact are forward-looking statements.

When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements.

These forward-looking statements are subject to risks and uncertainties, including those under "Risk Factors," which appear in elsewhere in this Annual Report, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.

Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors.

We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.

The Company was incorporated in Nevada as Jaguar Investments, Inc.

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Our solutions address the growing security and compliance complexities and risks resulting from the increasing adoption of cloud computing and the proliferation of geographically dispersed IT assets.

In March 2019, Visium entered into a software license agreement with MITRE Corporation to license a patented technology, known as TruContext, a tool for cyber warfare analytics, visualization, and knowledge management.

TruContext is a military-grade highly scalable big data analytics tool for Cybersecurity, based on graph database technology.

The development of the technology was sponsored by, and is currently in use by US Army Cyber Command.

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

Visium has completed significant proprietary product development efforts to commercialize TruContext.

During fiscal 2022 the Company rebranded TruContext as TruContext TM to reflect the enhanced version of the software tool which resulted from significant proprietary development of the software.

In March 2019, Visium entered into a software license agreement with MITRE Corporation to license a patented technology, known as Cygraph, a tool for cyber warfare analytics, visualization, and knowledge management.

Cygraph is a military-grade highly scalable big data analytics tool for Cybersecurity, based on graph database technology.

The development of the technology was sponsored by, and is currently in use by United States Army Cyber Command.

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

Visium has completed significant proprietary product development efforts to commercialize Cygraph.

During fiscal 2022 the Company rebranded Cygraph as TruContext TM to reflect the enhanced version of the software tool which resulted from significant proprietary development of the software.

The Company is entering the digital transformation and data center design and construction market after it landed a contract in November, 2023 valued at over $20 million from its partner, Cybastion Institute of Technology.

The contract is to oversee the design and construction of data centers in the Republic of Côte d’Ivoire and the Republic of Benin.

Visium is tasked with creating data centers that meet specific requirements and standards, ensuring optimal performance and reliability.

The scope of work includes data center architecture and design, power civil engineering, controls and distribution systems, rack layouts, network topology, vendor high availability, and a comprehensive security stack solution which will include Visium’s proprietary TruContext TM cybersecurity platform.

As of June 30, 2024 no activity has occurred pursuant to this contract.

Results of Operations

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Selling, General, and Administrative Expenses

For the year ended June 30, 2023, selling, general and administrative expenses were $2,198,639 as compared to $4,316,191 for the year ended June 30, 2022, a decrease of $2,117,552 or approximately 49%.

For the year ended June 30, 2024, selling, general and administrative expenses were $2,501,775 as compared to $2,198,639 for the year ended June 30, 2023, an increase of $303,136 or approximately 14%.

For the years ended June 30, 2024 and 2023 selling, general and administrative expenses consisted of the following:

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Stock based compensation

$ (2,117,552 )

The decrease in selling, general and administrative expenses during fiscal 2023, when compared with the prior year, is primarily due to a decrease in stock-based consulting expense of $311,103, stock based compensation of $1,154,358, a decrease in marketing expense of $201,062 and a decrease in legal and professional fees of $447,845, offset by an increase in consulting fees of $90,445, and an increase in accounting expense of $26,238.

The increase in selling, general and administrative expenses during fiscal 2024, when compared with the prior year, is primarily due to an increase in stock-based consulting expense of $388,885, an increase in legal and professional fees of $25,694, and an increase in consulting fees of $29,980, offset by a decrease in salaries of $97,088, a decrease in investor relations expense of $13,688, and a decrease in stock-based compensation expense of $14,743.

Change in Fair Value of Derivative Liability

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Interest expense represents the stated interest of notes and convertible notes payable as well as the amortization of debt discount.

The decrease in interest expense during fiscal 2023 is primarily due to higher discount amortization expense of $468,344 in fiscal 2022.

The decrease in interest expense during fiscal 2024 is primarily due to lower discount amortization expense of $59,600 in fiscal 2024.

Loss on extinguishment of debt

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Loss on extinguishment of debt

During the year ended June 30, 2023 we recorded a loss on the conversion of convertible note totaling $12,062, which is recorded in the Consolidated Statement of Operations as loss on extinguishment of debt.

A recap of the Loss on extinguishment of debt follows:

During the year ended June 30, 2023, we recorded a loss on the payoff of convertible note totaling $12,062, which is recorded in the Consolidated Statement of Operations as loss on extinguishment of debt.

A recap of the Loss on extinguishment of debt during fiscal 2023 is as follows:

Loss on extinguishment of debt related to warrants

Loss on extinguishment of debt related to note conversions

Gain on Debt Write-Off

Gain on debt write off/conversions

Liquidity and Capital Resources

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We were unable to generate sufficient funds from operations to fund our ongoing operating requirements through June 30, 2024.

As of September 20, 2023, we had approximately $100,000 on hand.

As of September 30, 2024, we had approximately $11,000.

We may need to raise funds to enhance our working capital and use them for strategic purposes.

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Going Concern

Ther accompanying financial statements have been prepared on a going concern basis.

The accompanying financial statements have been prepared on a going concern basis.

The Company has used net cash in its operating activities of $488,319 and $523,886 during the years ended June 30 2024 and 2023, respectively, and has a working capital deficit of approximately $5.1 million and $4.3 million at June 30, 2024 and 2023, respectively.

6 unchanged sentences

Non-cash Adjustments:

(Gain) loss on debt settlement and expense write off

Loss on debt settlement and expense write off

Stock based compensation

2 unchanged sentences

Gain on change in derivative liability

Amortization of deferred compensation

Amortization of prepaid expenses

Changes in assets and liabilities:

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Net cash used in operations in fiscal year 2024 decreased by $35,567 or 6.8% from fiscal year 2023.

Cash from financing activities was obtained through the sale of common stock that netted the Company $40,250, the sale of convertible notes that netted the Company $140,000, and the sale of promissory notes that netted the Company $190,000.

Cash from financing activities was obtained through the sale of convertible notes that netted the Company $122,960, and the sale of promissory notes that netted the Company $465,000.

Year ended June 30, 2023

Net cash used in operations in fiscal year 2022 increased by $1,525,536 or 192% from fiscal year 2021.

This cash was obtained through the sale of common stock that netted the Company $1,500,000, and three convertible notes that netted the Company $1,170,000.

Net cash used in operations in fiscal year 2023 decreased by $1,691,435 or 76% from fiscal year 2022.

Capital Raising Transactions

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Discount on convertible notes

Notes payable, net of discount

Convertible notes payable, net of discount

Notes Payable

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We generated net proceeds of $465,000 during fiscal 2024 from the issuance of short-term notes payable.

June 30, 2024

June 30, 2023

Notes payable

Discount on notes payable

Notes payable, net of discount

Common Stock Warrants

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Balance at beginning of year

Granted due to repricing

Balance at end of period

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Critical Accounting Policies

We have identified the policies below as critical to our understanding of the results of our business operations.

We discuss the impact and any associated risks related to these policies on our business operations throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results.

In the ordinary course of business, we have made a number of estimates and assumptions in preparing our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Actual results could differ significantly from those estimates and assumptions.

The financial statements have been prepared in accordance with accounting principles generally accepted in the US, (“US GAAP”.) The preparation of these financial statements in accordance with US GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates, assumptions and judgments.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results may differ from these estimates under different assumptions or conditions and the impact of such differences may be material to our financial statements.

We consider an accounting estimate to be critical if:

(1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

The following critical accounting policies are those that are most important to the portrayal of our consolidated financial statements.

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Revenue Recognition

We recognize revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”).

Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods.

The Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No.

2014-09, Revenue from Contracts with Customers (Topic 606) outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.

The guidance provided in Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) requires entities to use a five-step model to recognize revenue by allocating the consideration from contracts to performance obligations on a relative standalone selling price basis.

Revenue recognition is evaluated through the following five steps:

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Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Financial Statements and Supplementary Data.

The information required by this item is included in Item 15 of this Annual Report on Form 10-K.

The financial statements and supplementary data of the Company required by this Item are described in Item 15 of this Annual Report on Form 10-K and are presented beginning on page F-1.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis