VISIUM TECHNOLOGIES, INC. 10-Q

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. (“Visium”) was incorporated in Nevada as Jaguar Investments, Inc. during October 1987. During March 2003, a wholly owned subsidiary of the Company merged with Freight Rate, Inc., a development stage company in the logistics software business. During May 2003, the Company changed its name to Power2Ship, Inc. During October 2006, the Company merged with a newly formed, wholly owned subsidiary, Fittipaldi Logistics, Inc., a Nevada corporation, with the Company surviving but its name changed to Fittipaldi Logistics, Inc. effective November 2006. During December 2007, the Company merged with a newly formed, wholly owned subsidiary, NuState Energy Holdings, Inc., a Nevada corporation, with the Company surviving but renamed NuState Energy Holdings, Inc. effective December 2007. In March 2018, the Company brought in a new management team and changed its name to Visium Technologies, Inc. Visium is a provider of IT infrastructure professional services including network engineering, system engineering, converged infrastructure deployment, software development, and cybersecurity services. Visium’s proprietary cyber security visualization, big data analytics and automation platform operates in the traditional cyber security space, as well as in the Internet of Things and data analytics spaces. 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 cyber security, using graph database technology. The development of the technology was sponsored by the US Army and is currently in use by U.S. 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, which the Company has rebranded as TruContext TM . The commercialization efforts included adding functionality to the core technology to make it a native cloud application, adding multi-user and multi-tenant capability, enhancing the graphical user interface, (“GUI”) to make the application more intuitive to use, and adding enhanced dashboard and reporting capabilities. TruContext TM would typically be deployed by an enterprise and be used by the security analyst to intuitively understand the massive amount of data flowing through the network environment, giving the analyst actionable information in real-time to ensure that the network is protected from threats. The analyst will understand the relationships of the assets in the data center, the communication patterns, and cybersecurity exposures, in real-time. 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 September 30, 2024 no activity has occurred pursuant to this contract. The TruContext TM platform provides visualization, advanced cyber monitoring intelligence, threat hunting, forensic and root cause analysis, data modeling, analytics, and automation to help reduce risk, simplify security, and deliver better security outcomes. Our mission is to help people see and understand data, empowering decision-makers to make more informed and more timely decisions. Our solutions put the power of data into the hands of everyday people, allowing a broad population of business users to engage with their data, ask questions, solve problems, and create value. Our products dramatically reduce the complexity and expense associated with traditional business intelligence applications. Our software allows people to access information, perform analysis, and share results without assistance from technical specialists. By putting powerful analytical technology directly into the hands of people who make decisions with data, we accelerate the pace of informed and intelligent decision-making. Our TruContext TM platform enables our customers to reduce or streamline their siloed and layered security products, simplifying operations while providing a comprehensive solution. Our solution automates certain previously manual tasks, freeing up personnel to focus on their most important objectives. TruContext TM can be deployed in a broad range of use cases such as cyber security threat intelligence and forensics, IT/OT critical infrastructure security, supply chain analytics, anti-fraud, law enforcement, compliance, and health care. For example, a breach of your network might go undetected for months, as was the case with the Solar Winds hack that occurred in 2019-2020. In that case the hackers went undetected for 14 months. A Solar Winds type breach may not be preventable, but with TruContext TM analyzing streaming network data in real-time, this hack would almost certainly have been identified and remediated very quickly by the affected enterprise. TruContext TM is a very effective tool for proactively and iteratively searching through networks to detect and isolate advanced threats that evade existing security solutions. Should a breach occur, TruContext TM can quickly perform forensics and root cause analysis, identifying when an incident occurred, how it occurred, and the downstream effects of the incident to the network. One of the top challenges faced by Security practitioners is to keep up with the increase in new cyber-attacks while investigating and remediating existing threats. Time is of the essence while investigating potential threats and determining the scope and root-cause of a potential reach. Shortage of resources and experienced personnel continues to limit the ability of companies to conduct thorough investigations. Root cause analysis and forensics are key to intelligently securing the network. TruContext TM directly addresses these challenges by: Providing real-time comprehensive visualized information on security events, that · allow the cyber warrior to immediately pinpoint the root cause of the breach; and · know with certainty the priority and required remediation. 20 Table of Contents The real-time ingestion of and visualization of massive amounts of data simplifies the cyber effort, allowing the cyber analyst to intuitively understand the security posture of the organization at a glance. Using TruContext TM makes the cyber analyst significantly more productive by eliminating false positives and prioritizing threat events. TruContext TM ingests cyber data from any source , making the data generated by other cyber tools easily understood and actionable. TruContext TM give the security analyst the ability to combine, layer, filter, and query data with a no-code user interface in a way that no other analytics platform can do. There are some sophisticated and powerful cybersecurity tools currently available, but they all lack one thing – providing a comprehensive contextualized understanding of the data. Analysts have too many tools that don’t communicate, creating silos of data/information. TruContext TM brings all the information for a comprehensive visualization. On average, according to CrowdStrike, the time from breach to harm caused by threat actors is 98 minutes making the ability to: 1. Identify malicious hacks in real time; and 2. Perform threat hunting critically important for the security analyst. Using the MITRE ATT&CK framework, along with other open source intelligence information, TruContext TM can hunt threats beyond the physical network boundary so that the analyst fully understands his security posture in real time. TruContext TM leverages MITRE’s ATT&CK ® framework, which is a globally-accessible knowledge base of adversary tactics and techniques based on real-world observations. The ATT&CK knowledge base is used as a foundation for the development of specific threat models and methodologies in the private sector, in government, and in the cybersecurity product and service community. A use case example for TruContext TM would be in the event sensitive data is being exfiltrated from your network to an external IP address. TruContext TM has the capability to identify this activity and provide alerts that would allow the cyber analyst to quickly remediate the problem. Another example of how TruContext TM can be used by law enforcement in the context of police investigations. TruContext TM can analyze highly connected data in real time from any source and make connections which help police solve crime. Connections are quickly made between persons, objects, locations, and events (the POLE model), generating insights into patterns of behaviors and incidents. Using real-time data with TruContext TM helps investigators be proactive and prevent crime or other incidents, rather than only reacting after an incident has occurred. Visium currently plans to generate revenue in three (3) primary ways: · through a virtual appliance model , primarily targeted to the Federal government, charging an annual seat license, with the seat license fee increasing based on the size of the network environment ; · through a SaaS model , charging a recurring monthly license fee for TruContext TM based on the size of the network environment and the number of TruContext TM Identifiers (nodes); and · through professional services to support and deliver IT infrastructure and cybersecurity solutions and services to its customers delivered through a service contract for implementation and data science services. Partnership Ecosystem We work with a number of technology alliance partners to design go-to-market strategies that combine our platform with products or services provided by our technology alliance partners. These partner integrations deliver more secure solutions and an improved end user experience to their customers. Our technology alliance partnerships focus on security analytics, network and infrastructure security, threat platforms and orchestration, and automation. Visium heavily relies on our technology and infrastructure to provide our products and services to our customers. For example, we host many of our products using third-party data center facilities, and we do not control the operation of these facilities. In addition, we rely on certain technology that we license from third parties, including third-party commercial software and open-source software, which is used with certain of our solutions. Competition The markets for our solutions are highly competitive, and we expect both the requirements and pricing competition to increase, particularly given the increasingly sophisticated attacks, changing customer preferences and requirements, current economic pressures, and market consolidation. Competitive pressures in these markets may result in price reductions, reduced margins, loss of market share and inability to gain market share, and a decline in sales, any one of which could seriously impact our business, financial condition, results of operations, and cash flows. We may face competition due to changes in the manner that organizations utilize IT assets and the security solutions applied to them, such as the provision of privileged account security functionalities as part of public cloud providers’ infrastructure offerings, or cloud-based identity management solutions. Limited IT budgets may also result in competition with providers of other advanced threat protection solutions such as McAfee, LLC, Palo Alto Networks, Splunk Inc., and Dynatrace. We also may compete, to a certain extent, with vendors that offer products or services in adjacent or complementary markets to privileged access management, including identity management vendors and cloud platform providers such as Okta and Tableau. Employees As of September 30, 2024, we had five (5) full time employees. Available Information All reports of the Company filed with the SEC are available free of charge through the SEC’s website at www.sec.gov. In addition, the public may read and copy materials filed by the Company at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain additional information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. Our principal offices are located at 4094 Majestic Lane, Suite 360, Fairfax, Virginia 22033. Our telephone number is (703) 273-0383. Our common stock is quoted on the OTC Pink under the symbol “VISM”. 21 Table of Contents VISIUM TECHNOLOGIES, INC. RESULTS OF OPERATIONS Discussion of Results for Three Month Period Ended September 30, 2024 and 2023 Increase/ Increase/ Three-month period ended (Decrease) (Decrease) September 30, in $ 2024 in % 2024 2024 2023 vs 2023 vs 2023 Operating expenses: Selling, general and administrative $ 370,466 $ 508,140 $ (137,674 ) (27.1 %) Development expense - 28,363 (28,363 ) (100.0 %) Total operating expenses 370,466 536,503 (166,037 ) (30.9 %) Operating loss (370,466 ) (536,503 ) (166,037 ) (30.9 %) Other expense: Gain (loss) on change in fair value of derivative liabilities 26,111 (60,396 ) 86,507 143.2 % Gain on debt write off 725,059 - 725,059 100.0 % Gain on settlement of debt - 54,730 (54,730 ) (100.0 %) Interest expense (54,088 ) (46,530 ) (7,558 ) (16.2 %) Total other income (expenses) 697,082 (52,196 ) 571,096 1,435.5 % Net income (loss) $ 326,616 (588,699 ) $ 449,124 155.5 % Selling, General, and Administrative Expenses For the three months ended September 30, 2024, selling, general and administrative expenses were $370,466 as compared to $508,140 for the three months ended September 30, 2023, a decrease of $137,674 or approximately 27%. For the three months ended September 30, 2024 and 2023 selling, general and administrative expenses consisted of the following: Three Months Ended September 30, Increase/ 2024 2023 Decrease % Change Accounting expense $ 24,907 $ 30,579 $ (5,672 ) (18 %) Consulting fees 30,000 75,001 (45,001 ) (60 %) Salaries 223,175 243,390 (20,215 ) (8.0 %) Legal and professional fees 10,500 20,540 (10,040 ) (49 %) Travel expense 0 4,896 (4,896 ) (100 %) Occupancy expense (2 ) 582 (584 ) (100 %) Telephone expense 1,341 1,199 142 12 % Stock based consulting expense 23,270 47,347 (24,077 ) (51 %) Stock based compensation 52,500 66,924 (14,424 ) (22 %) Other 4,775 17,682 (12,907 ) (73 %) $ 370,466 $ 508,140 $ (137,674 ) (27 %) The decrease in selling, general and administrative expenses during fiscal Q1 of 2025, when compared with the prior year, is primarily due to a decrease in consulting fees of $45,001, stock-based consulting expense of $24,077, stock-based compensation expense of $14,424, legal and professional expenses of $10,040, accounting expenses of $5,672, and lower salaries expense of $20,215. We believe that our selling, general, and administrative expenses will remain consistent over the balance of the fiscal year. Other expenses may increase as we increase our business activity over the remainder of fiscal 2025. 22 Table of Contents Development Expense Three-Months Ended September 30, % 2024 2023 Change Development expense $ - $ 28,363 (100.0 )% Development expense represents the expense of further enhancing and commercializing TruContext. Interest Expense Three-Months Ended September 30, % 2024 2023 Change Interest expense $ 54,088 $ 46,530 $ 16.2 % 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, 2024 is primarily due to the acceleration of discount amortization expense during fiscal 2024, and lower interest bearing note balances in the current year. Gain on Debt Write-Off Three-Months Ended September 30, 2024 2023 Gain on debt write off/conversions $ 725,059 $ 54,730 In July 2024, the Company obtained a legal opinion to extinguish aged debt totaling $725,059 as detailed in the following table. Each of the individual debt instruments were determined to be beyond the statute of limitations and it was determined that the Company has a complete defense to liability related to this debt under the applicable statute of limitations. Accrued interest expense 361,559 Convertible notes payable 208,500 Promissory notes payable 155,000 $ 725,059 Liquidity and Capital Resources Balance at September 30, 2024 June 30, 2024 Cash $ 8,102 8,456 Accounts payable and accrued expenses 1,132,739 1,094,516 Accrued compensation 2,140,529 1,986,279 Notes, convertible notes, and accrued interest payable $ 1,181,900 1,852,431 At September 30, 2024 and June 30, 2024, 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, 2025. 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. 23 Table of Contents 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 $110,600 and $145,709 during the three-month periods ended September 30, 2024 and 2023, respectively, and has a working capital deficit of approximately $4.7 million and $5.1 million at September 30, 2024 and June 30, 2024, 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. Three months ended September 30, 2024 Net cash used in operations during the three months ended September 30, 2024 decreased by $35,109 or 24% over the same period during fiscal year 2024. Capital Raising Transactions During the quarter ending September 30, 2024 we generated net proceeds of $75,000 from the issuance of three promissory notes. Other outstanding obligations at September 30, 2024 Convertible Notes Payable The Company had convertible promissory notes aggregating $288,523 outstanding at September 30, 2024. The accrued interest amounted to approximately $121,615 as of September 30, 2024. The Convertible Notes Payable bear interest at rates ranging between 0% and 18% per annum. Interest is generally payable at maturity. The Convertible Notes Payable are generally convertible at rates ranging between $0.0042 and $22,500 per share, at the holders’ option. At September 30, 2024, approximately $239,623 of the promissory notes have matured. Notes Payable The Company had promissory notes aggregating $685,179 at September 30, 2024. The related accrued interest amounted to approximately $86,573 at September 30, 2024. The Notes Payable bear interest at a rate of 0% to16% per annum. Interest is payable monthly. Promissory notes totaling $275,000 have matured as of September 30, 2024. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. 24 Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable to a smaller reporting company.