NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
1: ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN
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, 2019 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 Mark Lucky as its Chief Executive Officer in February 2018 to provide strategic expertise in pursuing its business
plans.
Going
Concern
The
accompanying financial statements have been prepared on a going concern basis. For the year ended June 30, 2019 we had a net loss
of $1,757,932, had net cash used in operating activities of $566,745, and had negative working capital of $3,244,617. 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.
Management
is in the process of acquiring an operating entity actively engaged in a business that generates sustained revenues. We are also
considering several additional potential acquisitions and are investigating various candidates to determine whether they would
have the potential to add value to us for the benefit of our stockholders.
We
intend to restrict our consideration of potential business to communications, services, or technology. Because we have limited
resources, the scope and number of suitable candidates to merge with is relatively limited. Because we may participate in a business
opportunity with a newly formed firm, a firm that is in the development stage, or a firm that is entering a new phase of growth,
we may incur further risk due to the inability of the target’s management to have proven its abilities or effectiveness,
or the lack of an established market for the target’s products or services, or the inability to reach profitability in the
next few years.
Any
business combination or transaction may result in a significant issuance of shares and substantial dilution to our present stockholders.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 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 assumptions used
in Cox, Ross & Rubinstein Binomial Tree stock-based compensation valuation methods, such as expected volatility, risk-free
interest rate, and expected dividend rate and in the valuation allowance of deferred tax assets.
Cash
and Cash Equivalents
The
Company considers all highly liquid, temporary, cash equivalents or investments with an original maturity of three months or less
when purchased, to be cash equivalents. The Company had no cash equivalents during the years ended June 30, 2019 and 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 years ended June 30, 2019 and 2018, the Company had not reached a bank balance exceeding the
FDIC insurance limit.
Derivative
Liabilities
The
Company assessed the classification of its derivative financial instruments as of June 30, 2019 and 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.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
The
Company uses judgment in determining the fair value of derivative liabilities at the date of issuance and at every balance sheet
thereafter and in determining which valuation method is most appropriate for the instrument, the expected volatility, the implied
risk-free interest rate, as well as the expected dividend rate, if any. The Company recorded
a derivative liability as of June 30, 2019 of $807,054.
Fair
Value of Financial Instruments
The
Company accounts for assets and liabilities measured at fair value on a recurring basis, in accordance with ASC Topic 820, Fair
Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing
generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring
fair value, and expands disclosure about such fair value measurements.
ASC
820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize
the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level
1:
|
Observable
inputs such as quoted market prices in active markets for identical assets or liabilities.
|
|
|
Level
2:
|
Observable
market-based inputs or unobservable inputs that are corroborated by market data.
|
|
|
Level
3:
|
Unobservable
inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
|
Additional
Disclosures Regarding Fair Value Measurements
The
carrying value of cash, accounts payable and accrued expenses, accrued compensation, notes payable and convertible promissory
notes payable, approximate their fair value due to the short maturity of these items or the use of market interest rates.
Convertible
Instruments
The
Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated
from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records,
when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based
upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and
the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the
related debt to their earliest date of redemption. The Company also records deemed dividends for the intrinsic value of conversion
options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment
date of the note transaction and the effective conversion price embedded in the note.
ASC
815-40, Contracts in Entity’s own Equity, generally provides that, among other things, if an event is not within the entity’s
control, such contract could require net cash settlement and shall be classified as an asset or a liability.
The
Company determines whether the instruments issued in the transactions are considered indexed to the Company’s own stock.
During fiscal years 2014 through 2019 the Company’s issued convertible securities with variable conversion provisions that
resulted in derivative liabilities. See discussion above under derivative liabilities that resulted in a change in derivative
liability accounting.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Revenue
Recognition
In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The revenue recognition principle
in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition,
new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach,
a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. This standard is effective
for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company early adopted this standard
effective July 1, 2018. Since the Company has not earned any revenue to date, there has been no impact to the financial statements
upon adoption.
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 June 30, 2019, the Company had not filed tax returns for the tax years
ending June 30, 2008 through 2019 and such returns, when filed, potentially will be subject to audit by the taxing authorities
for a minimum of three years beyond the filing date under the three-year statute of limitations. The Company has not accrued any
potential tax penalties associated with not filing these tax returns. Due to recurring losses, management believes such potential
tax penalties, if any, would not be material in amount.
Share-Based
Payments
The
Company accounts for stock-based compensation in accordance with ASU 2019-07, Compensation – Stock Compensation (Topic 718).
This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to non-employees
(for example, service providers, external legal counsel, suppliers, etc.). The ASU expands the scope of Topic 718, Compensation—Stock
Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued
to non-employees for goods and services. Consequently, the accounting for share-based payments to non-employees and employees
will be substantially aligned.
Under
ASC Topic 718, “Compensation - Stock Compensation”. Under the fair value recognition provisions of this topic, stock-based
compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line
basis over the requisite service period, which is the vesting period.
The
Company has elected to use the Cox, Ross & Rubinstein Binomial Tree valuation model to estimate the fair value of its options,
which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield
to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on
awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time
of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Segment
Reporting
The
Company operates in one business segment which technologies are focused on cybersecurity.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Recent
Accounting Pronouncements
In
May 2018, the FASB issued ASU No. 2019-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 118, regarding the accounting implications of the recently issued Tax Cuts and Jobs Act (the “Act”).
This standard is effective immediately. The update clarifies that in a company’s financial statements that include the reporting
period in which the Act was enacted, the company must first reflect the income tax effects of the Act in which the accounting
under GAAP is complete. These amounts would not be provisional amounts. The company would also report provisional amounts for
those specific income tax effects for which the accounting under GAAP is incomplete, but a reasonable estimate can be determined.
The Company has recorded a provisional amount which it believes is a reasonable estimate of the effects of the Act on the Company’s
financial statements as of April 30, 2019. Technical corrections or other forthcoming guidance could change how the Company interprets
provisions of the Act, which may impact its effective tax rate and could affect its deferred tax assets, tax positions and/or
its tax liabilities.
In
July 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-11. “Earnings Per Share (Topic 260);
Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments
with Down Round Features, II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain
Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception (“ASU 2017-11”)
ASU 2017-11 revises the guidance for instruments with down round features in Subtopic 815-40, Derivatives and Hedging - Contracts
in Entity’s Own Equity, which is considered in determining whether an equity-linked financial instrument qualifies for a
scope exception from derivative accounting. An entity still is required to determine whether instruments would be classified in
equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify,
freestanding instruments with down round features are no longer classified as liabilities. ASU 2017-11 is effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2018, and early adoption is permitted, including
adoption in an interim period. ASU 2017-11 provides that upon adoption, an entity may apply this standard retrospectively to outstanding
financial instruments with a down round feature by means of a cumulative- effect adjustment to the opening balance of accumulated
deficit in the fiscal year and interim period adoption. The Company has adopted ASU 2017-11 retrospectively as of January 1, 2019.
The adoption of this ASU did not have any impact on its financial statements.
Basic
and Diluted Earnings Per Share
Basic earnings per share are calculated by
dividing income available to stockholders by the weighted-average number of shares of Common Stock outstanding during each period.
Diluted earnings per share are computed using the weighted average number of shares of Common Stock and the dilutive Common Stock
share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise
of in-the-money stock options and warrants (calculated using the modified-treasury stock method) and conversion of other securities
such as convertible debt or convertible preferred stock. Potential common shares includable in the computation of fully diluted
per-share results are not presented in the financial statements for the year ended June 30, 2019 and 2018 as their effect would
be anti-dilutive. Potential common shares that would be as follows:
|
|
For
the Years ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Weighted average common
shares outstanding
|
|
|
22,992,865
|
|
|
|
1,999,018
|
|
Effect of dilutive securities-when applicable:
|
|
|
|
|
|
|
|
|
Convertible promissory notes
|
|
|
14,604,829
|
|
|
|
10,052,242
|
|
Preferred Stock
|
|
|
13,996,767
|
|
|
|
13,996,767
|
|
Warrants
|
|
|
500,000
|
|
|
|
-
|
|
Fully diluted
earnings per share—adjusted weighted-average shares and assumed conversions
|
|
|
52,094,461
|
|
|
|
26,048,027
|
|
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
3: DERIVATIVE LIABILITY
Derivative
liability - warrants
The
Company issued warrants in connection with convertible notes payable which were issued in January 2019. These warrants have price
protection provisions that allow for the reduction in the exercise price of the warrants in the event the Company subsequently
issues stock or securities convertible into stock at a price lower than the $0.15 per share exercise price of the warrants. Simultaneously
with any reduction to the exercise price, the number of shares of common stock that may be purchased upon exercise of each of
these warrants shall be increased or decreased proportionately, so that after such adjustment the aggregate exercise price payable
for the adjusted number of warrants shall be the same as the aggregate exercise price in effect immediately prior to such adjustment.
Because it is indeterminate whether there is a sufficient number of authorized and unissued shares exists at the assessment date,
the Company calculates a derivative liability associated with the warrants in accordance with FASB ASC Topic 815-40-25.
Accounting
for Derivative Warrant Liability
The
Company’s derivative warrant instruments have been measured at fair value at June 30, 2019 using the Cox, Ross & Rubinstein
Binomial Tree valuation model. The Company recognizes the derivative liability related to those warrants that contain price protection
features in its consolidated balance sheet as liabilities. The liability is revalued at each reporting period and changes in fair
value are recognized currently in the consolidated statements of operations. The initial recognition and subsequent changes in
fair value of the derivative warrant liability have no effect on the Company’s cash flows.
Derivative
liability – convertible notes
The
Company has certain convertible notes with variable price conversion terms. Upon the issuance
of these convertible notes and as a consequence of their conversion features, the convertible notes give rise to derivative liabilities.
The Company’s derivative liabilities related to its convertible notes payable have been measured at fair value at
June 30, 2019 and June 30, 2018 using the Cox, Ross & Rubinstein Binomial Tree valuation model.
The
revaluation of the warrants and convertible debt at each reporting period, as well as the charges associated with issuing additional
convertible notes, and warrants with price protection features, resulted in the recognition of a loss of $183,130 and $0 for the
years ended June 30, 2019 and 2018, respectively in the Company’s consolidated statements of operations, under the caption
“Loss in change of fair value of derivative liability”. The fair value of the warrants at June 30, 2019 and June 30,
2018 was $37,200 and $0, respectively. The fair value of the derivative liability related to the convertible debt at June 30,
2019 and June 30, 2018 is $769,853 and $0, respectively, which is reported on the consolidated balance sheet under the caption
“Derivative liability”.
The
Company has determined its derivative liability to be a Level 3 fair value measurement. The significant assumptions used in the
Cox, Ross & Rubinstein Binomial Tree valuation of the derivative are as follows:
|
|
Year
Ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Effective exercise price
|
|
$
|
0.0355
- $ 0.0449
|
|
|
$
|
-
|
|
Effective market price
|
|
$
|
0.0745
|
|
|
$
|
-
|
|
Expected volatility
|
|
|
329.6%
to 411.42
|
%
|
|
|
-
|
%
|
Risk-free interest
|
|
|
1.92%
- 2.18
|
%
|
|
|
-
|
%
|
Expected terms
|
|
|
92
- 946 days
|
|
|
|
-
|
|
Expected dividend rate
|
|
|
0
|
%
|
|
|
-
|
%
|
Changes
in the derivative liabilities during the year ended June 30, 2019 was follows:
Derivative liability at June 30, 2018
|
|
$
|
-
|
|
Derivative liability expense
|
|
|
341,423
|
|
Gain on change in fair value of derivative
liabilities
|
|
|
183,130
|
|
Derivative liability
attributed to discount on notes payable
|
|
|
282,500
|
|
Derivative liability at June 30,
2019
|
|
$
|
807,053
|
|
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
4: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE
Convertible
Notes Payable
At
June 30, 2019 and June 30, 2018 convertible debentures consisted of the following:
|
|
June
30,
|
|
|
|
2019
|
|
|
2018
|
|
Convertible
notes payable
|
|
$
|
1,075,428
|
|
|
$
|
1,617,984
|
|
Discount
on convertible notes
|
|
|
(158,333
|
)
|
|
|
-
|
|
Convertible
notes, net
|
|
|
917,095
|
|
|
|
1,617,984
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable to ASC Recap
|
|
|
147,965
|
|
|
|
147,965
|
|
Total
|
|
$
|
1,065,060
|
|
|
$
|
1,765,949
|
|
The
Company had convertible promissory notes aggregating approximately $1.1 million and $1.8 million at June 30, 2019 and June 30,
2018, respectively. The related accrued interest amounted to approximately $434,835 and $1.44 million at June 30, 2019 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 $0.0355 to $22,500 (as a result of two reverse
stock splits) per share. At June 30, 2019, $765,000 of convertible promissory notes had matured, are in default and remain unpaid.
There is no provision in the note agreements for adjustments to the interest rates on these notes in the event of default.
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 12). 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.
During
the year ended June 30, 2018, the Company amended the conversion terms for twelve convertible noteholders. The amended notes totaled
$139,225 in principal and were amended such that the conversion price is fixed at $0.09 per share, from conversion terms that
were priced at a 50% discount of the average closing bid price per share of Common Stock during the ten consecutive trading days
immediately prior to any such conversion. For those notes that were converted immediately after the amendment, the Company recorded
a debt conversion expense of $96,272, in accordance with guidance in ASC-470 for induced debt conversions.
For
the year ended June 30, 2019, the following summarizes the conversion of debt for common shares:
|
|
|
|
|
|
|
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
Amount
Converted
|
|
|
Price
|
|
Date
|
|
Name
|
|
Shares
Issued
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
Per
Share
|
|
07/31/2018
|
|
DWIGHT POWER
|
|
|
111,111
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
10,000
|
|
|
$
|
0.09
|
|
08/02/2018
|
|
ROYAL PALM CONSULTING SERVICES LLC
|
|
|
431,116
|
|
|
|
18,100
|
|
|
|
20,700
|
|
|
|
38,800
|
|
|
$
|
0.09
|
|
09/13/2018
|
|
LANCE QUARTIERI
|
|
|
370,319
|
|
|
|
42,500
|
|
|
|
6,005
|
|
|
|
48,505
|
|
|
$
|
0.131
|
|
10/12/2018
|
|
ENTERPRISE SOLUTIONS LLC
|
|
|
120,000
|
|
|
|
14,500
|
|
|
|
3,500
|
|
|
|
18,000
|
|
|
$
|
0.15
|
|
11/05/2018
|
|
FOWLER FAMILY TRUST V/A DTD 10/28/96
|
|
|
179,167
|
|
|
|
16,125
|
|
|
|
-
|
|
|
|
16,125
|
|
|
$
|
0.09
|
|
11/05/2018
|
|
ARTHUR NOTINI
|
|
|
277,778
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
25,000
|
|
|
$
|
0.09
|
|
11/05/2018
|
|
ROY D MITTMAN
|
|
|
27,778
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
2,500
|
|
|
$
|
0.09
|
|
11/05/2018
|
|
ROY D MITTMAN
|
|
|
111,112
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
10,000
|
|
|
$
|
0.09
|
|
11/05/2018
|
|
GARY DUQUETTE
|
|
|
55,556
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
5,000
|
|
|
$
|
0.09
|
|
11/05/2018
|
|
DUQUETTE FAMILY LIVING TRUST
|
|
|
55,556
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
5,000
|
|
|
$
|
0.09
|
|
11/05/2018
|
|
GARY DUQUETTE
|
|
|
245,834
|
|
|
|
22,125
|
|
|
|
-
|
|
|
|
22,125
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,985,327
|
|
|
$
|
170,850
|
|
|
$
|
30,205
|
|
|
$
|
201,055
|
|
|
$
|
0.101
|
|
Transactions
Convertible
Notes Payable
In January, 2019 we issued convertible
notes to two investors, with a face value totaling $300,000 which generated net proceeds of $282,500. The notes bear interest
at 8% and have a term of one year.
Notes
Payable
The
Company had promissory notes aggregating $205,000 and $270,241 at June 30, 2019 and June 30, 2018, respectively. The related accrued
interest amounted to approximately $159,000 and $245,000 at June 30, 2019 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, 2019
have matured, are in default, and remain unpaid. There is no provision in the note agreements for adjustments to the interest
rates on these notes in the event of default.
The
Company recognized interest expense of approximately $276,000 and $276,000 during the fiscal years 2019 and 2018, respectively.
NOTE
5: ACCRUED INTEREST PAYABLE
Changes
in accrued interest payable during the year ended June 30, 2019, is as follows:
Accrued interest payable
at June 30, 2018
|
|
$
|
1,686,054
|
|
Interest expense on notes payable for
the year ended June, 2019
|
|
|
134,420
|
|
Gain on write off of accrued interest
|
|
|
(1,184,214
|
)
|
Cash paid for accrued interest
|
|
|
(1,235
|
)
|
Gain on forgiveness of accrued interest
|
|
|
(10,982
|
)
|
Conversion of
accrued interest into common stock
|
|
|
(30,205
|
)
|
Accrued interest
payable at June 30, 2019
|
|
$
|
593,838
|
|
Interest
expense for year ended June 30, 2019 was comprised of the following:
Interest expense for the
year ended June 30, 2019
|
|
$
|
134,420
|
|
Amortization
of debt discount
|
|
|
141,667
|
|
Total interest
expense for the year ended June 30, 2019
|
|
$
|
276,087
|
|
NOTE
6: Gain on Debt Write-Off
In
March 2019 the Company obtained a legal opinion to extinguish aged debt totaling $2,292,162 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.
Accounts payable and accrued
expenses
|
|
$
|
371,001
|
|
Accrued interest expense
|
|
|
1,184,214
|
|
Convertible notes payable
|
|
|
671,706
|
|
Promissory notes
payable
|
|
|
65,241
|
|
|
|
$
|
2,292,162
|
|
The
Company also recognized a gain on the forgiveness of accrued interest of $10,985 in October 2018.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
7: ACQUISITION AND INTANGIBLE ASSET
On
September 4, 2018, the Company entered into a Membership Interest Purchase Agreement (the “TSSG Purchase Agreement”)
with the members of Threat Surface Solutions Group, LLC (“TSSG”), a Virginia limited liability company, pursuant to
which the Company purchased all of the issued and outstanding membership and/or economic interests of TSSG. The TSSG Purchase
Agreement was amended on December 30, 2018, whereby the terms of the acquisition were modified such that the Company acquired
100% of the outstanding member interests of TSSG for 1,538,385 shares of Visium common stock valued at $500,000, the fair market
value on the date of the acquisition, plus a 10% royalty on sales generated by TSSG for a period of three years on the first $25,000,000
in revenue. The acquisition was accounted for using the purchase method of accounting. The results of operations are included
in the financial statements of operations from the date of acquisition. TSSG is a leading provider of cybersecurity services.
The purchase of TSSG included the acquisition of assets of $10,435 and liabilities of $57,872. The aggregate purchase price consisted
of the following:
Fair value of common
stock issued to seller
|
|
$
|
500,000
|
|
Net liabilities assumed
|
|
|
48,972
|
|
Contingent
consideration
|
|
|
52,315
|
|
|
|
$
|
601,287
|
|
The
following table summarizes the estimated fair values of TSSG’s assets acquired and liabilities assumed at the date of acquisition:
Cash
|
|
$
|
451
|
|
Accounts Receivable
|
|
|
9,984
|
|
Accounts payable
and accrued expenses
|
|
|
(59,407
|
)
|
|
|
$
|
(48,972
|
)
|
The
Company was to account for the royalty liability related to the revenue generated by TSSG as a reduction of the contingent liability.
Intangible
assets acquired from TSSG were assigned the following values: value of customer relationships with an assigned value of $601,287.
This intangible asset is being amortized over 36 months, its estimated useful life.
We
made an initial allocation of the purchase price at the date of acquisition based on our understanding of the fair value of acquired
assets and assumed liabilities. As of June 30, 2019, the Company determined that there was no future value related to the acquisition
and wrote off the net book value of the intangible assets, as follows:
Net intangible
asset as of date of impairment
|
|
$
|
459,311
|
|
Reversal
of contingent liability
|
|
|
(52,315
|
)
|
Impairment
expense
|
|
$
|
407,002
|
|
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
8: STOCKHOLDERS’ DEFICIT
Common
Stock
At
June 30, 2019, the Company had 10,000,000,000 authorized common shares. At June 30, 2019 the Company has 45,610,716 common shares
issued of which 42,066,270 were outstanding, which is net of 3,544,446 unvested shares issued for the restricted stock awards
granted during the year. See Note 8.
Issuances
of Common Stock During 2019
Convertible
Notes Payable
During
the fiscal year ended June 30, 2019 the Company issued 1,985,327 shares of its common stock related to the conversion of $201,055
of principal and accrued interest of its convertible notes payable, at an average contract conversion price of $0.101 per share.
Sale
of Restricted Common Stock
During
the fiscal year ended June 30, 2019 the Company issued 2,505,000 shares of its common stock related to the sale of its common
stock resulting in proceeds of $250,501, at an average price of $0.10 per share.
Acquisition
of Threat Surface Solutions Group, LLC
During
the fiscal year ended June 30, 2019 the Company issued 1,538,387 shares of its common stock related to its acquisition of Threat
Surface Solutions Group, LLC, valued at $500,000, or an average price of $0.325 per share.
Stock
Based Compensation
During the fiscal
year ended June 30, 2019 the Company issued 23,427,772 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 $1,901,500, or $0.081
per share, based on the share price at the time of the transactions.
During
the fiscal year ended June 30, 2019 we issued
3,233,341 shares of its common stock to consultants, as compensation. The shares were valued
at $0.054, the market price on the date of issuance for a total value of $174,500. The expense is included in general and administrative
expenses and was recognized on the date the stock was issued or vested.
Issuances
of Common Stock During the Year ended June 30, 2018
Convertible
Notes Payable
During
the year ended June 30, 2018, the Company issued 1,277,546 shares of its common stock upon the conversion of $141,430 of principal
of its outstanding convertible notes, at an average price of $0.111 per share.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
8: STOCKHOLDERS’ DEFICIT, continued
Stock
Based Compensation
During
May 2018 the Company issued 1,500,000 shares of its common stock to its CEO, Mark Lucky, as compensation. The shares were valued
at $0.06, the market price on the date of issuance for a total value of $90,000. The expense is included in general and administrative
expenses and was recognized on the date the stock was issued. See Note 10 – Related Party Transactions.
During
May 2018 the Company issued 1,000,000 shares of its common stock to Tom Grbelja, as compensation for his service on the Board
of Directors. The shares were valued at $0.06, the market price on the date of issuance for a total value of $60,000. The expense
is included in general and administrative expenses and was recognized on the date the stock was issued. See Note 10 – Related
Party Transactions.
During
May 2018 the Company issued 900,000 shares of its common stock to Paul Favata, as compensation for his service on the Board of
Directors. The shares were valued at $0.06, the market price on the date of issuance for a total value of $54,000. The expense
is included in general and administrative expenses and was recognized on the date the stock was issued. See Note 10 – Related
Party Transactions.
During
May 2018 the Company issued 1,450,000 shares of its common stock to two consultants, as compensation for consulting services.
The shares were valued at $0.06, the market price on the date of issuance for a total value of $87,000. The expense is included
in general and administrative expenses and was recognized on the date the stock was issued.
During
May 2018 the Company issued 1,131,350 shares of its common stock to three consultants, as compensation for consulting services.
The shares were valued at $0.12, the market price on the date of issuance for a total value of $135,762. The expense is included
in general and administrative expenses and was recognized on the date the stock was issued.
Sale
of Restricted Common Stock
During
May 2018 we sold 100,000 shares of common stock, valued at $10,000 to an accredited investor, 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.
Grants
of Restricted Common Stock
During
the quarter ended March 31, 2018 the Company issued a restricted share award of 166,667 shares of its $0.0001 par value common
stock to its new CEO, Mark Lucky, as compensation. The shares were valued at $50,000, or $0.30 per share on a post reverse split
basis.
During
the quarter ended March 31, 2018 the Company issued a restricted share award of 166,667 shares of its $0.0001 par value common
stock to its new board member, Tom Grbelja, as compensation for services rendered. The shares were valued at $50,000, or $0.30
per share on a post reverse split basis.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
8: STOCKHOLDERS’ DEFICIT, continued
During
the quarter ended March 31, 2018 the Company issued a restricted share award of 83,334 shares of its $0.0001 par value common
stock to its new board member, Paul Favata, as compensation for services rendered. The shares were valued at $25,000, or $0.30
per share on a post reverse split basis.
During
the quarter ended March 31, 2018 the Company issued 191,669 shares of its $0.0001 par value common stock to four consultants,
as compensation under four separate consulting agreements. The shares were valued at $57,500, or $0.30 per share on a post reverse
split basis.
During
the quarter ended March 31, 2018 the Company issued 95,238 shares of its $0.0001 par value common stock to satisfy a liability
owed to a Company controlled by our CEO. The shares were valued at $60,000, or $0.63 per share on a post reverse split basis,
the weighted average market price for the ten preceding days from the date that the shares were issued.
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 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 (1) 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 Chief Executive Officer,
is the holder of the one (1) share of Series AA Convertible Preferred Stock.
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
Note
9 - 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.
In
March 2019, the Company accelerated the vesting of 6,569,436 shares related to restricted stock awards to its directors and officers.
The expense related to the acceleration of vesting totaled $533,957, or $0.081 per share and is included in Selling, general and
administrative expenses in our Statement of Operations.
A
summary of the Company’s restricted stock activity for the year ended June 30, 2019
and 2018 is presented in the following table:
|
|
For
the Year ended
|
|
|
|
June
30, 2019
|
|
|
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
|
|
|
1,500,000
|
|
|
$
|
0.37
|
|
|
|
14,650,000
|
|
|
$
|
0.06
|
|
Forfeited
|
|
|
(930,955
|
)
|
|
|
0.36
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(10,861,106
|
)
|
|
$
|
0.08
|
|
|
|
(813,892
|
)
|
|
$
|
0.06
|
|
Unvested at end of period
|
|
|
3,544,447
|
|
|
$
|
0.06
|
|
|
|
13,836,108
|
|
|
$
|
0.06
|
|
Unrecognized
compensation expense related to outstanding restricted stock awards to employees and directors as of June
30, 2019 was $212,667 and is expected to be recognized over a weighted average period of 1.83 years.
NOTE
10: INCOME TAXES
The
Company has not filed its corporate tax returns since fiscal 2007.
Due
to recurring losses, the Company’s tax provision for the years ended June 30, 2019 and 2018 was $0.
The
difference between the effective income tax rate and the applicable statutory federal income tax rate is summarized as follows:
|
|
2019
|
|
|
2018
|
|
Statutory federal rate
|
|
|
(21.0
|
)%
|
|
|
(35.0
|
)%
|
State income tax rate, net of federal
benefit
|
|
|
(3.6
|
)%
|
|
|
(3.5
|
)%
|
Permanent differences, including stock-based
compensation
|
|
|
8.6
|
%
|
|
|
(5.6
|
)%
|
Change in valuation
allowance
|
|
|
16.0
|
%
|
|
|
44.1
|
%
|
Effective tax
rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
At
June 30, 2019 and 2018 the Company’s deferred tax assets were as follows:
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
Tax benefit of net operating loss carry forward
|
|
$
|
6,961,000
|
|
|
$
|
10,704,000
|
|
Intangible
|
|
|
85,000
|
|
|
|
-
|
|
Total deferred tax assets
|
|
|
7,046,000
|
|
|
|
10,704,000
|
|
|
|
|
|
|
|
|
|
|
Less: valuation allowance
|
|
|
(7,046,000
|
)
|
|
|
(10,704,000
|
)
|
Net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
As of June 30, 2019, the Company had unused
net operating loss carry forwards of approximately $33.2 million available to reduce future federal taxable income. Net operating
loss carryforwards expire through fiscal years ending 2037. Internal Revenue Code Section 382 places a limitation on the amount
of taxable income that can be offset by carryforwards after a change in control (generally a greater than 50% change in ownership).
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
10: INCOME TAXES, continued
The Company’s ability to offset future
taxable income, if any, with tax net operating loss carryforwards may be limited due to the non-filing of tax returns and the
impact of the statute of limitations on the Company’s ability to claim such benefits. Furthermore, changes in ownership
may result in limitations under Internal Revenue Code Section 382. Due to these limitations, and other considerations, management
has established full valuation allowances on deferred tax assets relating to net operating loss carryforward, as the realization
of any future benefits from these assets is uncertain.
The Company’s valuation allowance at June 30, 2019 and 2018 was $7,046,000
and $10,704,000, respectively. The change in the valuation allowance during the year ended June 30, 2019 was a decrease of approximately
$3,658,000. The change in the valuation allowance during the year ended June 30, 2018 was an increase of $340,000. Effective December
22, 2018 a new tax bill was signed into law that reduced the federal income tax rate for corporations from 35% to 21.7% for the
year ended June 30, 2019. Going forward the blended rate will be 25.4% for future years. The change in blended tax rate reduced
the 2019 net operating loss carry forward deferred tax assets by approximately $3.3 million.
NOTE
11: RELATED PARTY TRANSACTIONS
During
fiscal 2018, the Company incurred expenses of $8,843 to a related party by means of common ownership and management with the Company
as compensation to our former Chairman of the Board and Chief Executive Officer. The expenses are recorded as consulting expense
and appears in general and administrative expense on our Statement of Operations. No such expenses were incurred during fiscal
2019.
Equity
transactions with related parties are described in Note 8.
From
time to time we have borrowed operating funds from Mr. Mark Lucky, our Chief Executive Officer and from certain Directors, for
working capital. The advances were payable upon demand and were interest free. During year ended June 30, 2019 Mr. Lucky advanced
$42,000, and Mr. Grbelja advanced $20,000 to the Company. $62,000 of these advances remain outstanding as of June 30, 2019.
NOTE
12: COMMITMENTS AND CONTINGENCIES
Operating
Leases
The
Company leases a virtual office space under a non-cancelable operating lease, which expires August 31, 2019. Future minimum annual
payments under non-cancelable operating leases at June 30, 2019 are as follows (in thousands):
Year
ending June 30,
|
|
Amount
|
|
2020
|
|
$
|
700
|
|
2021
|
|
|
-
|
|
2022
|
|
|
-
|
|
2023
|
|
|
-
|
|
2024
|
|
|
-
|
|
Thereafter
|
|
|
-
|
|
Total future
minimum lease payments
|
|
$
|
700
|
|
VISIUM
TECHNOLOGIES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2019 AND 2018
NOTE
12: COMMITMENTS AND CONTINGENCIES, continued
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 June 30, 2019, and based on the assessment
there are no probable loss contingencies requiring accrual or disclosures within its financial statements.
License
Contingent Consideration
Our
license agreements with the sellers of Threat Surface Solutions Group, LLC includes a provision for a royalty payment based on
ten percent (10%) of sales generated by Threat
Surface Solutions Group beginning on the Agreement Date and ending on October 12, 2021, capped at a maximum royalty of $2,500,000.
As of June 30, 2019 we have not generated any revenue related to these license agreements.
Our
license agreements with George Mason University and The MITRE Corporation include provisions for a royalty payment on revenues
collected of 5% and 5%, respectively. As of June 30, 2019 we have not generated any revenue related to these license agreements.
Legal
Claims
In
July 2018 the Company was named as the defendant in a legal proceeding brought by Tarpon Bay Partners LLC (the “Plaintiff”)
in the Judicial District Court of Danbury, Connecticut. Plaintiff asserts that the Company failed to convert two convertible notes
held by Plaintiff. The Company is vigorously contesting this claim. There
are no other proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is
an adverse party or has a material interest adverse to our interest.
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.
Note
13 – Fair Value Measurement
Fair
value measurements
At
June 30, 2019 and 2018, the fair value of derivative liabilities is estimated using the Cox, Ross & Rubinstein Binomial Tree
valuation model using inputs that include the expected volatility, the implied risk-free interest rate, as well as the expected
dividend rate. The derivative liabilities are the only Level 3 fair value measures.
At
June 30, 2019 and 2018, the estimated fair values of the liabilities measured on a recurring basis are as follows:
|
|
Fair
Value Measurements at
|
|
|
|
June
30, 2019:
|
|
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
Derivative liability –
Convertible notes
|
|
|
|
|
|
|
|
|
|
|
769,853
|
|
Derivative liability
– Warrants
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
31,250
|
|
Total derivative
liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
807,053
|
|
NOTE
14: SUBSEQUENT EVENTS
In July 2019 the Company issued 513,286
shares of its common stock upon the conversion of principal of $10,000, and $4,710 of accrued interest on its outstanding
convertible notes, valued at $0.03246 per share.
In August 2019 the Company issued 2,300,000
shares of its common stock upon the conversion of principal of $9,140, and $1,850 of accrued interest on its outstanding
convertible notes, valued at $0.00554 per share.
In September 2019 the Company issued 18,146,931
shares of its common stock upon the conversion of principal of $50,499, $9,563 of accrued interest on its outstanding convertible
notes, valued at $0.00335.
In
July and August 2019 322,222 restricted shares which were issued to consultants were vested.