INVU 10-Q
Investview, Inc. (INVU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
FOR THE QUARTERLY PERIOD ENDED
For the transition period from__________________ to _______________________.
Commission
File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| ||
| (Address of principal executive offices) | (Zip Code) |
Issuer’s
telephone number:
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
| ☒ | No | ☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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).
| ☒ | No | ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes | ☐ | No |
As of November 12, 2024, there were shares of common stock, $ par value, outstanding.
INVESTVIEW, INC.
Form 10-Q for the Nine Months Ended September 30, 2024
Table of Contents
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
INVESTVIEW, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Prepaid assets | ||||||||
| Receivables | ||||||||
| Deposits, current | ||||||||
| Income tax paid in advance | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Other assets: | ||||||||
| Operating lease right-of-use asset | ||||||||
| Deposits | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Payroll liabilities | ||||||||
| Income tax payable | ||||||||
| Deferred revenue | ||||||||
| Derivative liability | ||||||||
| Dividend liability | ||||||||
| Operating lease liability, current | ||||||||
| Related party debt, net of discounts, current | ||||||||
| Debt, net of discounts, current | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, long term | ||||||||
| Accrued liabilities, long term | ||||||||
| Related party debt, net of discounts, long term | ||||||||
| Debt, net of discounts, long term | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, par value: $; shares authorized, and issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | ||||||||
| Common stock, par value $; shares authorized; and shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
INVESTVIEW, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue: | ||||||||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | $ | $ | $ | ||||||||||||
| Mining revenue | ||||||||||||||||
| Cryptocurrency revenue | ||||||||||||||||
| Mining equipment repair revenue | ||||||||||||||||
| Total revenue, net | ||||||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of sales and service | ||||||||||||||||
| Commissions | ||||||||||||||||
| Selling and marketing | ||||||||||||||||
| Salary and related | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Impairment expense | ||||||||||||||||
| Loss (gain) on disposal of assets | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating costs and expenses | ||||||||||||||||
| Net income (loss) from operations | ( | ) | ||||||||||||||
| Other income (expense): | ||||||||||||||||
| Gain (loss) on fair value of derivative liability | ||||||||||||||||
| Realized gain (loss) on cryptocurrency | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense, related parties | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Total other income (expense) | ( | ) | ||||||||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) | ( | ) | ||||||||||||||
| Dividends on Preferred Stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) applicable to common shareholders | $ | ( | ) | $ | $ | $ | ||||||||||
| Basic income (loss) per common share | $ | ( | ) | $ | $ | $ | ||||||||||
| Diluted income (loss) per common share | $ | ( | ) | $ | $ | $ | ||||||||||
| Basic weighted average number of common shares outstanding | ||||||||||||||||
| Diluted weighted average number of common shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
INVESTVIEW, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Paid in | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Warrant Exercise | - | |||||||||||||||||||||||||||||||
| Derivative liability extinguished with warrant exercise | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services and other stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock repurchased from former related parties and canceled | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock repurchased from former related parties and canceled | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services and other stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock canceled | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
INVESTVIEW INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | $ | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of debt discount | ||||||||
| Stock issued for services and other stock-based compensation | ||||||||
| Lease cost, net of repayment | ||||||||
| (Gain) loss on disposal of assets | ||||||||
| (Gain) loss on fair value of derivative liability | ( | ) | ( | ) | ||||
| Realized (gain) loss on cryptocurrency | ( | ) | ( | ) | ||||
| Impairment expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | ( | ) | ( | ) | ||||
| Inventory | ||||||||
| Prepaid assets | ( | ) | ||||||
| Income tax paid in advance | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Deposits | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Income tax payable | ( | ) | ||||||
| Customer advance | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Accrued interest | ||||||||
| Accrued interest, related parties | ||||||||
| Net cash provided by (used in) operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash received for the disposal of fixed assets | ||||||||
| Cash paid for fixed assets | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayments for related party debt | ( | ) | ( | ) | ||||
| Repayments for debt | ( | ) | ( | ) | ||||
| Payments for shares repurchased from former related parties | ( | ) | ||||||
| Dividends paid | ( | ) | ( | ) | ||||
| Proceeds from the exercise of warrants | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | ||||||||
| Cash, cash equivalents, and restricted cash - beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash - end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Common stock repurchased for payables | $ | $ | ||||||
| Derivative liability extinguished with warrant exercise | $ | $ | ||||||
| Dividends declared | $ | $ | ||||||
| Dividends paid with cryptocurrency | $ | $ | ||||||
| Debt extinguished in exchange for cryptocurrency | $ | $ | ||||||
| Shares forfeited | $ | $ | ||||||
| Recognition of lease liability and ROU assets at lease commencement | $ | $ | ||||||
| Cryptocurrency received from sale of fixed assets | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Organization
Investview,
Inc. was incorporated on
Effective
April 1, 2017, we closed on a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company (“Wealth
Generators”), pursuant to which the Wealth Generators members contributed
On
June 6, 2017, we entered into an Acquisition Agreement with Market Trend Strategies, LLC, a company whose members are also former members
of our management. Under the Acquisition Agreement, we spun-off our operations that existed prior to the merger with Wealth Generators
and sold the intangible assets used in those pre-merger operations in exchange for Market Trend Strategies’ assumption of $
On February 28, 2018, we filed a name change for Wealth Generators, LLC to Kuvera, LLC (“Kuvera”).
On January 17, 2019, we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SAFETek, LLC, a Utah limited liability company.
On January 11, 2021, we filed a name change for Kuvera, LLC to iGenius, LLC (“iGenius”) and on February 2, 2021, we filed a name change for Kuvera (N.I.) Limited to iGenius Global LTD.
On September 20, 2021, the Board of Directors approved a change in our fiscal year from March 31 to December 31.
Nature of Business
We operate a diversified financial technology services company offering several different lines of business, including a business unit that provides financial educational tools, content and research, through a global distribution network of independent distributors; and a business unit that offers digital products and services that support blockchain technologies and Bitcoin mining operations; and a business unit that manufactures and develops a collection of proprietary health, beauty and wellness products for its existing base of wholesale customers, and plans to expand its sales and marketing initiatives by developing and offering proprietary products through our global distribution network of independent distributors and direct to consumers platform. In addition, we plan to develop a business unit that will offer investors an online trading platform to enable self-directed retail brokerage services by integrating the early-stage online brokerage trading platform we acquired during March 2024, with the proprietary algorithmic trading platform we acquired in September 2021.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
Our policy is to prepare our financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
| 7 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the operating results that may be expected for our year ending December 31, 2024, as will be included in the filing of our Annual Report on Form 10-K for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2023 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC, SAFETek, LLC, Investview Financial Group Holdings, LLC, Opencash Finance, Inc., Opencash Securities, LLC, Investview MTS, LLC, and MyLife Wellness Company. All intercompany transactions and balances have been eliminated in consolidation.
Financial Statement Reclassification
Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles 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 reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
Financial
instruments that potentially expose us to concentration of credit risk include cash and receivables. We place our cash and temporary
cash investments with credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit of $
Cash Equivalents and Restricted Cash
For purposes of reporting cash flows, we consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. As of September 30, 2024 and December 31, 2023, we had no highly liquid debt instruments.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same such amounts shown in the statement of cash flows.
September 30, 2024 | December 31, 2023 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Total cash, cash equivalents, and restricted cash shown on the statement of cash flows | $ | $ | ||||||
| 8 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Amount included in restricted cash represent funds required to be held in an escrow account by a contractual agreement and will be used for paying dividends to our Series B Preferred Stockholders and funds required to be held in an account as collateral for business charges on our Company credit card.
Receivables
Receivables
are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review
of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual receivables
and receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when
received. We had an allowance for doubtful accounts of $
Deposits
We
contract with service providers for hosting of our data processing equipment and operational support in data centers where the Company’s
data processing equipment is deployed. These arrangements typically require advance payments to vendors pursuant to the contractual obligations
associated with these services. Additionally, from time to time, our vendors require deposits be paid by us and held by them in the normal
course of business. The Company classifies these payments as “Deposits, current” or “Deposits” in the Consolidated
Balance Sheets. As of September 30, 2024 and December 31,2023, such deposits totaled $
Fixed Assets
Fixed assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net difference less any amount realized from disposition is reflected in earnings. Expenditures for maintenance and repairs which do not extend the useful lives of the related assets are expensed as incurred.
Fixed assets were made up of the following at each balance sheet date:
| Estimated
Useful Life (years) | September
30, 2024 | December 31, 2023 | ||||||||
| Furniture, fixtures, and equipment | $ | $ | ||||||||
| Computer equipment | ||||||||||
| Data processing equipment | ||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||
| Net book value | $ | $ | ||||||||
Total
depreciation expense for the nine months ended September 30, 2024 and 2023, was $
| 9 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Long-Lived Assets – Cryptocurrencies & Intangible Assets
We account for our cryptocurrencies and intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30 requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
We
hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as Other current assets. The value of our cryptocurrencies
as of September 30, 2024 and December 31, 2023, were $
Impairment of Long-Lived Assets
We have adopted ASC Subtopic 360-10, Property, Plant and Equipment. ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by us be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value of an asset may no longer be appropriate. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.
We
evaluate the recoverability of long-lived assets based upon future net cash flows expected to result from the asset, including eventual
disposition. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted and an impairment loss
is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. During the nine months
ended September 30, 2024, we impaired data processing equipment $
Fair Value of Financial Instruments
Fair value is defined 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, based on our principal or, in the absence of a principal, most advantageous market for the specific asset or liability.
U.S. generally accepted accounting principles provide for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:
| Level 1: | Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access. |
| 10 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
| Level 2: | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: |
| - | quoted prices for similar assets or liabilities in active markets; | |
| - | quoted prices for identical or similar assets or liabilities in markets that are not active; | |
| - | inputs other than quoted prices that are observable for the asset or liability; and | |
| - | inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| Level 3: | Inputs that are unobservable and reflect management’s own assumptions about the inputs market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). |
Our financial instruments consist of cash, accounts receivable and accounts payable, and debt. We have determined that the book value of our outstanding financial instruments as of September 30, 2024 and December 31, 2023, approximates the fair value due to their short-term nature or interest rates that approximate prevailing market rates.
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of September 30, 2024:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December 31, 2023:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
Revenue Recognition
Subscription Revenue
Most
of our revenue is generated by membership and subscription sales and payment is received at the time of purchase. We recognize subscription
revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and
recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over
a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for
the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first-time
subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues
are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds,
sales incentives, credits, and known and estimated credit card chargebacks. As of September 30, 2024 and December 31, 2023, our deferred
revenues were $
| 11 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Mining Revenue
We generate revenue from mining bitcoin. The Company has entered into a digital asset mining pool by executing a contract, as amended from time to time, with the mining pool operator to provide computing power to the mining pool. The contract is terminable at any time by either party without penalty and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, we are entitled to a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator.
Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contract with the mining pool operator. The transaction consideration the Company receives is net of a contractually agreed upon “pool fee percentage” charged and kept by the mining pool operator and is noncash, in the form of Bitcoin, which the Company measures at fair value on the date Bitcoin is received. This value is not materially different than the fair value at the moment we meet the performance obligation, which can be recalculated based on the contractual formula. The consideration is variable. The amount of consideration recognized is constrained to the amount of consideration received, which is when it is probable a significant reversal will not occur. There is no significant financing component or risk of a significant revenue reversal in these transactions due to the performance obligations and settlement of the transactions being on a daily basis.
Cryptocurrency Revenue
During 2023, we generated revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party supplier. The various packages included different amounts of coin with differing rates of returns and terms. The coin is delivered by a third-party supplier. The sale of cryptocurrency packages was discontinued during the year ended December 31, 2023.
During 2023, we recognized cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation was to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment was received from our customers at the time of order placement. All customers were given two weeks to request a refund, therefore we would record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party supplier to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our supplier on our books. During the nine months ended September 30, 2024, we generated revenue from the sale of cryptocurrency packages.
Mining Equipment Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, prior to June 30, 2023, we repaired broken mining equipment for sale to third-party customers. Our mining equipment repair business was discontinued during the quarter ended June 30, 2023.
Prior to June 30, 2023, we recognized miner repair revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation was to deliver the promised goods to our customers.
Revenue generated for the nine months ended September 30, 2024, was as follows:
Subscription Revenue | Mining Revenue | Total | ||||||||||
| Gross billings/receipts | $ | $ | $ | |||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||
| Net revenue | $ | $ | $ | |||||||||
For
the nine months ended September 30, 2024, foreign and domestic revenues were approximately $
| 12 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Revenue generated for the nine months ended September 30, 2023, was as follows:
| Subscription
Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
For
the nine months ended September 30, 2023, foreign and domestic revenues were approximately $
Revenue generated for the three months ended September 30, 2024, was as follows:
| Subscription
Revenue | Mining Revenue | Total | ||||||||||
| Gross billings/receipts | $ | $ | $ | |||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||
| Net revenue | $ | $ | $ | |||||||||
For
the three months ended September 30, 2024, foreign and domestic revenues were approximately $
Revenue generated for the three months ended September 30, 2023, was as follows:
Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | ||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
For
the three months ended September 30, 2023, foreign and domestic revenues were approximately $
| 13 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Selling and Marketing Costs
We
expense selling and marketing costs as incurred. Selling and marketing costs include costs of promoting our
product worldwide, including promotional events. Selling and marketing expenses for the nine months ended September 30,
2024 and 2023, totaled $
Cost of Sales and Service
Included
in our costs of sales and services are amounts paid to our trading and market experts that provide financial education content and tools
to our subscription customers and hosting and electricity fees that we pay to a third-party vendor in order to generate mining revenue.
Costs of sales and services for the nine months ended September 30, 2024 and 2023, totaled $
Inventory
Inventory
is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method and is inclusive of any shipping and
tax costs. Due to the discontinuance of our miner repair business during the quarter ended June 30, 2023, all inventory was sold. During
the nine months ended September 30, 2023, we recognized a loss on disposal of assets of $
Income Taxes
Income taxes are recorded in accordance with ASC Topic 740, Income Taxes, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against our deferred tax assets. Deferred tax assets are reduced by a valuation allowance if, based on the consideration of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Changes in assumptions in future periods may require we adjust our valuation allowance, which could materially impact our financial position and results of operations. The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return, if such a position is more likely than not to be sustained.
We follow ASC Subtopic 260-10, Earnings per Share, which specifies the computation, presentation, and disclosure requirements of earnings per share information. Basic loss per share has been calculated based upon the weighted average number of common shares outstanding. Diluted income (loss) per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.
| 14 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
September 30, 2024 | September 30, 2023 | |||||||
| Net income | $ | |||||||
| Less: preferred dividends | ( | ) | ( | ) | ||||
| Add: interest expense on convertible debt | ||||||||
| Net income available to common shareholders (numerator) | $ | |||||||
| Basic weighted average number of common shares outstanding | ||||||||
| Dilutive impact of convertible notes | ||||||||
| Dilutive impact of non-voting membership interest | ||||||||
| Diluted weighted average number of common shares outstanding (denominator) | ||||||||
| Diluted income per common share | $ | |||||||
September 30, 2024 | September 30, 2023 | |||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
The following table illustrates the computation of diluted earnings per share for the three months ended September 30, 2023. Due to the net loss for the three months ended September 30, 2024, basic and diluted income per share were the same, as all securities had an antidilutive effect.
September 30, 2023 | ||||
| Net income (loss) | $ | |||
| Less: preferred dividends | ( | ) | ||
| Add: interest expense on convertible debt | ||||
| Net income available to common shareholders (numerator) | $ | |||
| Basic weighted average number of common shares outstanding | ||||
| Dilutive impact of convertible notes | ||||
| Dilutive impact of non-voting membership interest | ||||
| Diluted weighted average number of common shares outstanding (denominator) | ||||
| Diluted income per common share | $ | |||
The following table presents potentially dilutive securities that were not included in the computation of diluted net income per share as their inclusion would be anti-dilutive.
September 30, 2024 | September 30, 2023 | |||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Common stock issuable upon conversion of notes | N/A | |||||||
| Common stock issuable upon conversion of non-voting membership interest | N/A | |||||||
Lease Obligation
We determine if an arrangement is a lease at inception. Operating leases are included in the operating lease right-of-use asset account, the operating lease liability, current account, and the operating lease liability, long term account in our balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
| 15 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have elected to not apply the recognition requirements of ASC 842 to short-term leases (leases with terms of twelve months or less). Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term. We have elected the practical expedient and will not separate non-lease components from lease components and will instead account for each separate lease component and non-lease component associated with the lease components as a single lease component.
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company has not yet adopted ASU No. 2023-08 and is currently evaluating the impact that the adoption will have on the Company’s financial statement presentation and disclosures.
We have noted no other recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements.
NOTE 4 – LIQUIDITY
Our financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
During
the nine months ended September 30, 2024, we recorded net income from operations of $
NOTE 5 – RELATED-PARTY TRANSACTIONS
Related Party Debt
Our related-party payables consisted of the following:
September
30, 2024 | December
31, 2023 | |||||||
| Convertible
Promissory Note entered into on 4/27/20, net of debt discount of $ | $ | $ | ||||||
| Convertible
Promissory Note entered into on 5/27/20, net of debt discount of $ | ||||||||
| Convertible
Promissory Note entered into on 11/9/20, net of debt discount of $ | ||||||||
| Working Capital Promissory Note entered into on 3/22/21 [4] | ||||||||
| Total related-party debt | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Related-party debt, long term | $ | $ | ||||||
| [1] |
| 16 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
| [2] | |
| [3] | |
| [4] |
The
loans referenced in footnotes 1-3 above, were advanced under a Securities Purchase Agreement we entered into on April 27, 2020, with
DBR Capital. Under the Securities Purchase Agreement (which was subsequently amended and restated), DBR Capital agreed to advance up
to $
On August 12, 2022, we and DBR Capital, entered into a Fourth Amendment to the now Amended and Restated Securities Purchase Agreement that extends the deadlines for the fourth and fifth closings under that Agreement from December 31, 2022, to December 31, 2024. The fourth and fifth closings remain at the sole discretion of DBR Capital, and we cannot provide any assurance that they will occur when contemplated or ever.
| 17 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Other Related Party Arrangements
On
September 29, 2023, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase
and Release Agreement dated September 18, 2023 (the “Romano/Raynor Agreement”). Under the Romano/Raynor Agreement, the Company
purchased for surrender in a series of private transactions, an aggregate of shares of the Company’s common stock (the
“Romano/Raynor Purchased Shares”) from sellers consisting of Mario Romano, Annette Raynor, and a series of their family members
and related entities (collectively, the “Sellers”). The Romano/Raynor Purchased Shares were purchased for aggregate consideration
of $
In
addition to the cash consideration for the Purchased Shares, the Company also agreed to cover a limited amount of the legal fees incurred
by the Sellers in the transaction, as well as provide Mr. Romano and Ms. Raynor with a $
The
consideration paid for the Purchased Shares of $
On
February 7, 2024, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase
and Release Agreement dated February 6, 2024 (the “Smith/Miller Agreement”). Under the Smith/Miller Agreement, the Company
purchased for surrender and cancellation a total of shares of the Company’s common stock (the “Smith/Miller Purchased
Shares”) from Ryan Smith and Chad Miller and certain of their respective affiliates and family members. The Smith/Miller Purchased
Shares were purchased for aggregate purchase price of $
The
consideration paid for the Purchased Shares of $
NOTE 6 – DEBT
Our debt consisted of the following:
September 30, 2024 | December
31, 2023 | |||||||
| Loan with the U.S. Small Business Administration dated 4/19/20 [1] | $ | $ | ||||||
| Long term notes for APEX lease buyback [2] | ||||||||
| Total debt | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Debt, long term portion | $ | $ | ||||||
| [1] |
| 18 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
| [2] |
NOTE 7 – DERIVATIVE LIABILITY
During the nine months ended September 30, 2024, we had the following activity in our derivative liability account relating to our warrants:
| Derivative liability at December 31, 2023 | $ | |||
| Derivative liability recorded on new instruments | ||||
| Derivative liability reduced by warrant exercise | ||||
| (Gain) loss on fair value | ( | ) | ||
| Derivative liability at September 30, 2024 | $ |
We use the binomial option pricing model to estimate fair value for those instruments at inception, at warrant exercise, and at each reporting date. During the nine months ended September 30, 2024, the assumptions used in our binomial option pricing model were in the following range:
| Risk free interest rate | % | |||
| Expected life in years | ||||
| Expected volatility | % |
NOTE 8 – OPERATING LEASE
In July 2021, we entered an operating lease for office space in Wyckoff, New Jersey (the “Wyckoff Lease”), and in September 2021 we assumed an operating lease for office space in Haverford, Pennsylvania (the “Haverford Lease”) in connection with the MPower acquisition. This facility now serves as the headquarters of the company.
At
commencement of the Wyckoff Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
date of acquisition of the Haverford Lease, right-of-use assets and lease liabilities obtained amounted to $
| 19 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Operating
lease expense was $
Future minimum lease payments under non-cancellable leases as of September 30, 2024, were as follows:
| Remainder of 2024 | $ | |||
| 2025 | ||||
| Total | ||||
| Less: Interest | ( | ) | ||
| Present value of lease liability | ||||
| Operating lease liability, current [1] | ( | ) | ||
| Operating lease liability, long term | $ |
| [1] |
NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
We are authorized to issue up to shares of preferred stock with a par value of $ and our board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges, and preferences of that preferred stock.
Our
Board of Directors approved the designation of
On
or about August 17, 2021, we completed a public offering of units at $ per unit, with each unit consisting of
As of September 30, 2024 and December 31, 2023, we had shares of preferred stock issued and outstanding.
Preferred Stock Dividends
During
the nine months ended September 30, 2024, we recorded $
During
the nine months ended September 30, 2023, we recorded $
| 20 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Common Stock Transactions
During
the nine months ended September 30, 2024, we repurchased shares from two of the original founders of the Company and a series
of their family members and related entities in exchange for cash of $
During
the nine months ended September 30, 2023, we issued shares of common stock as a result of warrants exercised, resulting in proceeds
of $
As of September 30, 2024 and December 31, 2023, we had and shares of common stock issued and outstanding, respectively.
Options
The 2022 Incentive Plan authorizes a variety of incentive awards consisting of stock options, restricted stock, restricted stock units, and reserves for issuance up to shares of the Company’s common stock.
During the nine months ended September 30, 2024, we issued stock options as part of the acquisition of Opencash Finance, Inc. and stock options as part of a compensation package offered to a new officer of the Company. The options vest in equal amounts over a period, at an exercise price of $ per share, with a seven-year life. We utilized the Black Scholes Model to value these options, and the expense related to these options is being recognized over the vesting term. Also, during the nine months ended September 30, 2024, we cancelled unvested options upon the resignation of an officer of the Company.
| Weighted | ||||||||||||
| Average | ||||||||||||
| Weighted | Grant-Date | |||||||||||
| Number of | Average | Per Share | ||||||||||
| Options | Exercise Price | Fair Value | ||||||||||
| Options outstanding at December 31, 2023 | $ | | $ | | ||||||||
| Granted | $ | $ | ||||||||||
| Canceled/Expired | ( | ) | $ | $ | ||||||||
| Exercised | $ | $ | - | |||||||||
| Options outstanding at September 30, 2024 | $ | $ | ||||||||||
| Options Exercisable | Weighted Average Exercise Price of Options Exercisable | Weighted Average Contractual Life of Options Exercisable (Years) | Weighted Average Contractual Life of Options Outstanding (Years) | |||||||||||
Total
stock compensation expense related to the options for the nine months ended September, 2024 and 2023, was $
| 21 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Warrants
Transactions involving our warrants are summarized as follows:
| Weighted | ||||||||
| Number of | Average | |||||||
| Shares | Exercise Price | |||||||
| Warrants outstanding at December 31, 2023 | $ | | ||||||
| Granted | $ | |||||||
| Canceled/Expired | $ | |||||||
| Exercised | $ | |||||||
| Warrants outstanding at September 30, 2024 | $ | |||||||
Details of our warrants outstanding as of September 30, 2024, is as follows:
| Warrants Exercisable | Weighted Average Contractual Life of Warrants Outstanding and Exercisable (Years) | |||||
Class B Units of Investview Financial Group Holdings, LLC
As
of September 30, 2024, and December 31, 2023, there were
| 22 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Litigation
In the ordinary course of business, we may be, or have been, involved in legal proceedings. During November 2021, we received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. In the subpoena, the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities laws and or any other law. Following our own internal review, we believe that we have complied at all times with the federal securities laws. Through the end of our third quarter in 2024, with the exception of a follow-up request to provide supplemental documentation during May 2024, we have generally received no follow-up communications from the SEC following our original production of documents in 2022. The Company continues to provide its full cooperation to the Commission. We have cooperated fully with the SEC’s investigation and will continue to work with outside counsel to respond to any further inquiries of the SEC, if, and to the extent they arise.
Through
August 2023, we generated revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party
supplier, certain of which, until January 2022, included a product protection option provided by a third-party provider.
The
Company’s financial statements as of September 30, 2024, reflect a receivables balance of $
Joseph Cammarata served as an officer and director of the Company from December 2019 through his termination for cause on or about December 7, 2021. Mr. Cammarata was terminated following the announcement of civil and criminal charges filed against him in connection with his involvement with a class action claims aggregator unrelated to the Company. The Company was unaware of these outside business interests. Based on public reporting of the matter, the Company believes that Mr. Cammarata was convicted of certain of these criminal charges and is presently incarcerated.
| 23 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF September 30, 2024
(Unaudited)
Prior to his termination, Mr. Cammarata and the Company engaged in certain transactions as described below:
We
issued a promissory note to Mr. Cammarata, which, following certain modifications, on or about March 30, 2021, was restated in the principal
amount of $
On
March 22, 2021, we entered into Securities Purchase Agreements to purchase
NOTE 11 – INCOME TAXES
For the periods ended September 30, 2024, and September 30, 2023, the Company used a discrete effective tax rate method for recording income taxes, as compared to an estimated full year annual effective tax rate method, as an estimate of the annual effective tax rate cannot be made.
Provision
for income taxes for the three and nine months ended September 30, 2024, was $
NOTE 12 – SUBSEQUENT EVENTS
In accordance with ASC Topic 855, Subsequent Events, we have evaluated subsequent events through the date of this filing and have determined that the following events require disclosure.
On
October 11, 2024, we closed on the purchase of the business and assets of Renu Laboratories, Inc., along with a
On October 25, 2024, we entered into an agreement (the “Agreement”) with three non-affiliate shareholders (the “Sellers”) to repurchase in a private transaction a total of million shares of the Company’s common stock (the “Purchased Shares”). The Purchased Shares represent approximately % of the Company’s outstanding shares. Upon the closing under the Agreement, the Purchased Shares are to be acquired by the Company for surrender and cancellation at a discount to the closing price of the Company’s common stock on the date of the Agreement (the “Purchase Price”). The transactions contemplated by the Agreement are scheduled to close subject to the satisfaction of customary closing conditions, including the delivery of the Purchased Shares to the Company. In addition to customary purchase and sale terms, under the Agreement, the Sellers agreed to provide a customary release to the Company and its affiliates; as well, they agreed to certain customary standstill, non-disparagement and non-solicitation covenants. Following closing, if and when it occurs, the Purchase Price will be payable in a series of 10 equal consecutive quarterly payments.
On November 1, 2024, we entered a lease agreement for
| 24 |
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following discussion should be read in conjunction with our consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, as noted by use of the words “believe,” “expect,” “plan,” “project,” “estimate,” and any variations thereof that are intended to identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management, and involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found elsewhere in this Report and in our periodic reports filed with the U.S. Securities and Exchange Commission. The forward-looking statements included are made only as of the date of this report. Except as required by law, we have no obligation and do not undertake to update or revise any such forward-looking statements to reflect events or circumstances after the date of the report.
Business Overview
We operate a diversified financial technology services company offering several different lines of business, including a business unit that provides financial educational tools, content and research, through a global distribution network of independent distributors; and a business unit that offers digital products and services that support blockchain technologies and Bitcoin mining operations; and a business unit that manufactures and develops a collection of proprietary health, beauty and wellness products for its existing base of wholesale customers, and plans to expand its sales and marketing initiatives by developing and offering proprietary products through our global distribution network of independent distributors and direct to consumers platform. In addition, we plan to develop a business unit that will offer investors an online trading platform to enable self-directed retail brokerage services by integrating the early-stage online brokerage trading platform we acquired during March 2024, with the proprietary algorithmic trading platform we acquired in September 2021.
Results of Operations
Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023
Revenues
| Three Months Ended September 30, | Increase | |||||||||||
| 2024 | 2023 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 11,175,466 | $ | 16,117,992 | $ | (4,942,526 | ) | |||||
| Mining revenue | 567,415 | 2,905,182 | (2,337,767 | ) | ||||||||
| Cryptocurrency revenue | - | 146,466 | (146,466 | ) | ||||||||
| Total revenue, net | $ | 11,742,881 | $ | 19,169,640 | $ | (7,426,759 | ) | |||||
Revenue, net, decreased $7,426,759 or 39%, from $19,169,640 for the three months ended September 30, 2023, to $11,742,881 for the three months ended September 30, 2024. The decrease can be explained by a $4.9 million decrease in our subscription revenue, $2.3 million decrease in our mining revenue, and $146 thousand decrease in our cryptocurrency revenue. The $4.9 million (31%) decrease in subscription revenue was driven by the continued adverse impact of global inflation which caused a general slowdown in the direct sales and home based business industry; the $2.3 million (80%) decrease in mining revenue was a result of a number of factors, including, the “Bitcoin Halving” which occurred on April 19, 2024, and increase in Bitcoin Network Difficulty and a mandated power curtailment enforced by the government-controlled utility company in Iceland, partially offset by an increase in the price of Bitcoin; and the $146 thousand (100%) decrease in cryptocurrency revenue was due to the discontinuation of our distribution of NDAU packages during the year ended December 31, 2023.
| 25 |
Operating Costs and Expenses
| Three Months Ended September 30, | Increase | |||||||||||
| 2024 | 2023 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Cost of sales and service | $ | 1,257,569 | $ | 3,147,890 | $ | (1,890,321 | ) | |||||
| Commissions | 6,270,310 | 9,272,024 | (3,001,714 | ) | ||||||||
| Selling and marketing | 16,751 | 7,410 | 9,341 | |||||||||
| Salary and related | 1,471,649 | 1,714,299 | (242,650 | ) | ||||||||
| Professional fees | 416,410 | 285,133 | 131,277 | |||||||||
| Impairment Expense | 977,418 | - | 977,418 | |||||||||
| General and administrative | 2,031,269 | 2,500,129 | (468,860 | ) | ||||||||
| Total operating costs and expenses | $ | 12,441,376 | $ | 16,926,885 | $ | (4,485,509 | ) | |||||
Operating costs decreased $4,485,509, or 26%, from $16,926,885 for the three months ended September 30, 2023, to $12,441,376 for the three months ended September 30, 2024. The decrease can be explained by a decrease in commissions of $3 million, which was a result of decreases in our subscription revenue, a decrease in cost of sales and services of $1.9 million, which was a result of a power curtailment mandated by the government-controlled utility companies in Iceland, and a decrease in general and administrative expenses, which was a result of decreases in credit card processing fees due to the decreases in our subscription revenue and decreases in costs related to our mining operations. These decreases were offset by an increase in impairment expense of $977 thousand due to impairment of our data processing equipment during the current period.
Other Income and Expenses
| Three Months Ended September 30, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Gain (loss) on fair value of derivative liability | $ | 2,034 | $ | 11,939 | $ | (9,905 | ) | |||||
| Realized gain (loss) on cryptocurrency | 1,558 | (58,401 | ) | 59,959 | ||||||||
| Interest expense | (4,726 | ) | (4,726 | ) | - | |||||||
| Interest expense, related parties | (310,594 | ) | (310,594 | ) | - | |||||||
| Other income (expense) | 294,862 | 431,603 | (136,741 | ) | ||||||||
| Total other income (expense) | $ | (16,866 | ) | $ | 69,821 | $ | (86,867 | ) | ||||
We recognized other expense of $16,866 for the three months ended September 30, 2024. This reflected a decrease of $86,867, or 124%, from other income of $69,821 recognized for the three months ended September 30, 2023. The change is due to a decrease in Other income (expense) in the current period of $137 thousand, as a result of a decrease in lease payments received under a structured equipment lease agreement, offset with the recognition of more interest income in the current period due to our cash balances being held in higher interest-bearing accounts, as compared to the equivalent prior year period. The decrease in Other income (expense) was offset by a realized gain recorded on cryptocurrency in the current period of $2 thousand compared to a realized loss of $58 thousand in the equivalent prior year period.
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Revenues
| Nine Months Ended September 30, | Increase | |||||||||||
| 2024 | 2023 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 36,232,688 | $ | 41,659,185 | $ | (5,426,497 | ) | |||||
| Mining revenue | 4,288,791 | 7,798,279 | (3,509,488 | ) | ||||||||
| Cryptocurrency revenue | - | 513,285 | (513,285 | ) | ||||||||
| Miner equipment repair revenue | - | 23,378 | (23,378 | ) | ||||||||
| Total revenue, net | $ | 40,521,479 | $ | 49,994,127 | $ | (9,472,648 | ) | |||||
Revenue, net, decreased $9,472,648, or 19%, from $49,994,127 for the nine months ended September 30, 2023, to $40,521,479 for the nine months ended September 30, 2024. The decrease can be explained by $5.4 million, $3.5 million, and $513 thousand decreases in our subscription revenue, mining revenue, and cryptocurrency revenue, respectively. The $5.4 million (13%) decrease in subscription revenue was driven by the continued adverse impact of global inflation which caused a general slowdown in the direct sales and home based business industry; the $3.5 million (45%) decrease in mining revenue was a result of “Bitcoin Halving” which occurred on April 19th, 2024, an increase in Bitcoin Network Difficulty and a mandated power curtailment enforced by the government-controlled utility companies in Iceland, partially offset by an increase in the price of Bitcoin; and the $513 thousand decrease in cryptocurrency revenue was due to the discontinuation of our distribution of NDAU during the year ended December 31, 2023.
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Operating Costs and Expenses
| Nine Months Ended September 30, | Increase | |||||||||||
| 2024 | 2023 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Cost of sales and service | $ | 4,703,513 | $ | 7,614,768 | $ | (2,911,255 | ) | |||||
| Commissions | 19,988,364 | 24,005,229 | (4,016,865 | ) | ||||||||
| Selling and marketing | 548,559 | 536,464 | 12,095 | |||||||||
| Salary and related | 4,859,463 | 5,416,292 | (556,829 | ) | ||||||||
| Professional fees | 1,201,406 | 1,202,674 | (1,268 | ) | ||||||||
| Impairment Expense | 977,418 | - | 977,418 | |||||||||
| Loss (gain) on disposal of assets | 180,223 | 184,221 | (3,998 | ) | ||||||||
| General and administrative | 6,435,522 | 7,190,383 | (754,861 | ) | ||||||||
| Total operating costs and expenses | $ | 38,894,468 | $ | 46,150,031 | $ | (7,255,563 | ) | |||||
Operating costs decreased $7,255,563, or 16%, from $46,150,031 for the nine months ended September 30, 2023, to $38,894,468 for the nine months ended September 30, 2024. The decrease can be explained by a decrease in commissions of $4.0 million, which was a result of decreases in our subscription revenue, a decrease in cost of sales and services of $2.9 million, which was a result of a power curtailment mandated by the government-controlled utility companies in Iceland, a decrease in salary and related of $557 thousand, which was a result of a decrease in stock based compensation, and a decrease in general and administrative expenses, which was a result of decreases in credit card processing fees due to the decreases in our subscription revenue and decreases in costs related to our mining operations. These decreases were offset by an increase in impairment expense of $977 thousand due to impairment of our data processing equipment during the current period.
Other Income and Expenses
| Nine Months Ended September 30, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Gain (loss) on fair value of derivative liability | $ | 5,434 | $ | 15,596 | $ | (10,161 | ) | |||||
| Realized gain (loss) on cryptocurrency | 284,112 | 170,444 | 113,668 | |||||||||
| Interest expense | (14,076 | ) | (14,024 | ) | (52 | ) | ||||||
| Interest expense, related parties | (929,934 | ) | (929,008 | ) | (926 | ) | ||||||
| Other income (expense) | 1,284,021 | 1,027,108 | 256,912 | |||||||||
| Total other income (expense) | $ | 629,557 | $ | 270,116 | $ | 359,441 | ||||||
We recognized other income of $629,557 for the nine months ended September 30, 2024. This reflects an increase of $359,441, or 133%, from other income of $270,116 recognized for the nine months ended September 30, 2023. The change is due to a realized gain on cryptocurrency in the current period of $284 thousand compared to a realized gain of $170 thousand in the equivalent prior year period and an increase in Other income (expense) in the current period of $257 thousand, as we recognized more interest income in the current period due to our cash balances being held in higher interest-bearing accounts, as compared to the equivalent prior year period, and as a result of an increase in ticket sales from certain promotional events iGenius held during the nine months ended September 30, 2024 and 2023.
Liquidity and Capital Resources
During the nine months ended September 30, 2024, we met our short- and long-term working capital and capital expenditure requirements, including funding for operations, capital expenditures, growth initiatives, and for debt service on our outstanding indebtedness and dividends on our Series B Preferred Stock, through net cash flows provided by operating activities. We believe we will have sufficient resources, including cash flow from operations and access to capital markets, to meet debt service obligations in a timely manner and be able to meet our objectives.
During the nine months ended September 30, 2024, we recorded net income from operations of $1,627,011 and net income of $1,392,139. As of September 30, 2024, we have unrestricted cash of $24,452,902. Also, as of September 30, 2024, our current assets exceeded our current liabilities to result in working capital of $17,421,468 and our cryptocurrency balance was reported at a cost basis of $461,674. Management does not believe there are any liquidity issues as of September 30, 2024.
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Critical Accounting Policies
Basis of Accounting
Our policy is to prepare our financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the operating results that may be expected for our year ending December 31, 2024, as will be included in the filing of our Annual Report on Form 10-K for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2023, consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC, SAFETek, LLC, Investview Financial Group Holdings, LLC, Opencash Finance, Inc., Opencash Securities, LLC, Investview MTS, LLC, and MyLife Wellness Company. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles 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 reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Long-Lived Assets – Cryptocurrencies & Intangible Assets
We account for our cryptocurrencies and intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30 requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
We hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as Other current assets. The value of our cryptocurrencies as of September 30, 2024 and December 31, 2023 were $461,674 and $585,632, respectively. Cryptocurrencies purchased or received for payment from customers are recorded in accordance with ASC 350-30 and cryptocurrencies awarded to the Company through its mining activities ($4,288,791 and $7,798,279 for the nine months ended September 30, 2024 and 2023, respectively) are accounted for in connection with the Company’s revenue recognition policy. The use of cryptocurrencies is accounted for in accordance with the first in first out method of accounting. For the nine months ended September 30, 2024 and 2023, we recorded realized gains (losses) on our cryptocurrency transactions of $284,112 and $170,444, respectively.
Impairment of Long-Lived Assets
We have adopted ASC Subtopic 360-10, Property, Plant and Equipment. ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by us be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value of an asset may no longer be appropriate. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.
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We evaluate the recoverability of long-lived assets based upon future net cash flows expected to result from the asset, including eventual disposition. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted and an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. During the nine months ended September 30, 2024 and September 30, 2023, we impaired data processing equipment $977,418. During the nine months ended September 30, 2023, no impairment was recorded.
Subscription Revenue
Most of our revenue is generated by membership and subscription sales and payment is received at the time of purchase. We recognize subscription revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first-time subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds, sales incentives, credits, and known and estimated credit card chargebacks. As of September 30, 2024 and December 31, 2023, our deferred revenues were $2,365,008 and $2,703,398, respectively.
Mining Revenue
We generate revenue from mining bitcoin. The Company has entered into a digital asset mining pool by executing a contract, as amended from time to time, with the mining pool operator to provide computing power to the mining pool. The contract is terminable at any time by either party without penalty and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, we are entitled to a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator.
Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contract with the mining pool operator. The transaction consideration the Company receives is net of a contractually agreed upon “pool fee percentage” charged and kept by the mining pool operator and is noncash, in the form of Bitcoin, which the Company measures at fair value on the date Bitcoin is received. This value is not materially different than the fair value at the moment we meet the performance obligation, which can be recalculated based on the contractual formula. The consideration is variable. The amount of consideration recognized is constrained to the amount of consideration received, which is when it is probable a significant reversal will not occur. There is no significant financing component or risk of a significant revenue reversal in these transactions due to the performance obligations and settlement of the transactions being on a daily basis.
Cryptocurrency Revenue
During 2023, we generated revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party supplier. The various packages included different amounts of coin with differing rates of returns and terms. The coin is delivered by a third-party supplier. The sale of cryptocurrency packages was discontinued during the year ended December 31, 2023.
During 2023, we recognized cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation was to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment was received from our customers at the time of order placement. All customers were given two weeks to request a refund, therefore we would record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party supplier to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our supplier on our books. During the quarter ended September 30, 2024, we generated no revenue from the sale of cryptocurrency packages.
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Mining Equipment Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, prior to June 30, 2023, we repaired broken mining equipment for sale to third-party customers. Our mining equipment repair business was discontinued during the quarter ended June 30, 2023.
Prior to June 30, 2023, we recognized miner repair revenue in accordance with ASC 606-10 where revenue was measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver the promised goods to our customers.
Revenue generated for the nine months ended September 30, 2024, was as follows:
| Subscription Revenue | Mining Revenue | Total | ||||||||||
| Gross billings/receipts | $ | 38,580,943 | $ | 4,288,791 | $ | 42,869,734 | ||||||
| Refunds, incentives, credits, and chargebacks | (2,348,255 | ) | - | (2,348,255 | ) | |||||||
| Net revenue | $ | 36,232,688 | $ | 4,288,791 | $ | 40,521,479 | ||||||
For the nine months ended September 30, 2024, foreign and domestic revenues were approximately $33.1 million and $7.4 million, respectively.
Revenue generated for the nine months ended September 30, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 45,284,739 | $ | 990,785 | $ | 7,798,279 | $ | 23,378 | $ | 54,097,181 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (3,625,554 | ) | - | - | - | (3,625,554 | ) | |||||||||||||
| Amounts paid to providers | - | (477,500 | ) | - | - | (477,500 | ) | |||||||||||||
| Net revenue | $ | 41,659,185 | $ | 513,285 | $ | 7,798,279 | $ | 23,378 | $ | 49,994,127 | ||||||||||
For the nine months ended September 30, 2023, foreign and domestic revenues were approximately $38.1 million and $11.9 million, respectively.
Revenue generated for the three months ended September 30, 2024, was as follows:
| Subscription Revenue | Mining Revenue | Total | ||||||||||
| Gross billings/receipts | $ | 12,023,415 | $ | 567,415 | $ | 12,590,830 | ||||||
| Refunds, incentives, credits, and chargebacks | (847,949 | ) | - | (847,949 | ) | |||||||
| Net revenue | $ | 11,175,466 | $ | 567,415 | $ | 11,742,881 | ||||||
For the three months ended September 30, 2024, foreign and domestic revenues were approximately $10.3 million and $1.4 million, respectively.
Revenue generated for the three months ended September 30, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 17,499,805 | $ | 258,466 | $ | 2,905,182 | $ | 20,663,453 | ||||||||
| Refunds, incentives, credits, and chargebacks | (1,381,813 | ) | - | - | (1,381,813 | ) | ||||||||||
| Amounts paid to providers | - | (112,000 | ) | - | (112,000 | ) | ||||||||||
| Net revenue | $ | 16,117,992 | $ | 146,466 | $ | 2,905,182 | $ | 19,169,640 | ||||||||
For the three months ended September 30, 2023, foreign and domestic revenues were approximately $14.7 million and $4.5 million, respectively.
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Recent Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company has not yet adopted ASU No. 2023-08 and is currently evaluating the impact that the adoption will have on the Company’s financial statement presentation and disclosures.
We have noted no other recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity, or capital expenditures.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.
ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective.
Changes in Internal Controls
There were no changes in our internal controls over financial reporting during the fiscal quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
There have been no material changes to this information since reported on in the Annual Report on Form 10-K for the year ended December 31, 2023.
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ITEM 1.A – RISK FACTORS
Except as set forth below, there have been no material changes in the risk factors disclosed by us under Part I, Item 1A. Risk Factors contained in the Annual Report on Form 10-K for the year ended December 31, 2023.
During 2024, we instituted collection efforts through litigation against one of our credit card processors and its clearing bank as efforts to account for and collect approximately $1.87 million of our credit card receivables that were supposed to have been held by them in reserve, have not proven successful.
The Company’s financial statements as of September 30, 2024, reflect a receivables balance of $2.48 million. Of that balance, $2.47 million represents receivables that arise out of credit card transactions generated by the Company’s iGenius subsidiary. The credit card transactions that arise out of the ordinary course operations of the Company’s iGenius subsidiary, are processed by the Company’s credit card processors, in conjunction with their clearing banks. Over time, the balance of credit card collections being held by one of our credit card processors and its clearing bank, which are legally supposed to be held for the benefit of the Company, subject to coverage for chargebacks and other normal course collection issues, has increased to approximately $1.87 million; an amount that has been generally confirmed by the credit card processor. As they had been unresponsive to our repeated demands for payment, claiming that they were in the process of concluding their internal accounting of the amounts due and status of our accounts, in March 2024, the Company instituted a lawsuit against this credit card processor and its clearing bank seeking, among other things, an accounting for and repayment of the withheld funds. Notwithstanding, to date, we have been unable, through negotiations and through our lawsuit, to recover any amount of the receivable balances owed to us as the credit card processor asserts, among others, that it continues to evaluate possible exposure to chargebacks and other normal course collection issues. Recently, however, the Company’s application for a pre-judgment writ of attachment against both the credit card processor and the clearing bank, has been granted. Although the Company’s collection efforts will likely be enhanced by application of the pre-judgment writ of attachment, there can still be no assurances that the Company will be able to collect some or all of the funds owed to it. Should the Company be unable to collect some or all of the funds owed, it will be caused to incur a corollary bad debt expense of up to the uncollected amount which is currently approximately $1.87 million. Furthermore, the Company may be caused under generally accepted accounting principles, to incur a bad debt expense if it is determined that the amounts owed to the Company are unlikely to be collected, although the Company has not yet reached that conclusion. A charge of up to $1.87 million, which represents less than 10% of the Company’s current assets, would not have a material adverse effect upon the Company’s long-term liquidity, however, could have a material adverse effect upon the Company’s net earnings in the period incurred.
Our business could be negatively affected if we are required to defend allegations that our direct selling activities are fraudulent or deceptive schemes, against public interest, or involve the sale of unregistered securities.
Our iGenius products and services are marketed by a global network of independent distributors using a direct selling business model. Although we believe that our direct selling business model is generally in compliance with applicable legal standards, direct selling programs, in general, have often been the target of regulatory scrutiny by federal, state, and local governmental agencies in the United States and foreign countries, including the FTC. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, often referred to as “pyramid” schemes, which compensate participants primarily for recruiting additional participants without significant emphasis on product sales, whereas the more successful direct selling business models have and emphasize sales of products and services. The regulatory requirements concerning direct selling programs do not include “bright line” rules and are inherently fact-based and, thus, we are subject to the risk that these regulations or the enforcement or interpretation of these regulations by regulators or courts can change. The adoption of new regulations, or changes in the interpretations or enforcement of existing regulations, may result in significant compliance costs or require us to change or cease aspects of our network marketing program. In addition, the ambiguity surrounding these regulations can also affect the public perception of our business. In the normal course of operations, we have periodically received inquiries from foreign or domestic regulators relative to matters of this nature. In addition, from time to time, we receive notices or formal actions from foreign or domestic regulatory authorities or administrative agencies, that assert that the activities of certain of our independent distributors, as well as our iGenius business unit, as it generally relates to that component of our business that provides financial education and related tools, or introduces our customers to, financial products or licensed third-parties who offer financial advice or products, constitute unlicensed activities as an unregistered securities dealer or advisor under local laws. However, we do not believe that this component of our business violates any such laws as we believe we are merely a provider of financial education and related tools that access information that is available publicly or without a licensing requirement, or that through affinity programs provide access to services or products offered by third parties neither owned or operated by iGenius, who are appropriately licensed or registered. When we are confronted with such allegations, we may either elect to challenge the legal basis thereof when we believe it is appropriate or economically compelling, or in the instances in which the financial impact of the relief sought is de minimis, we may elect to settle with any such regulator, often without admitting any violation of law.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 – OTHER INFORMATION
During
the first nine months of the fiscal year ended December 31, 2024, no director of “officer” as defined in Rule 16a-1(f) under
the Exchange Act
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ITEM 6 – EXHIBITS
The following exhibits are filed as a part of this report:
Exhibit Number* |
Title of Document | Location | ||
| Item 21 | Subsidiaries of the Registrant | |||
| 21.01 | Schedule of Subsidiaries | This filing. | ||
| Item 31 | Rule 13a-14(a)/15d-14(a) Certifications | |||
| 31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | This filing. | ||
| 31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | This filing. | ||
| Item 32 | Section 1350 Certifications | |||
| 32.01 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
| 32.02 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
| Item 101*** | Interactive Data File | |||
| 101.INS | Inline XBRL Instance Document | This filing. | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | This filing. | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | This filing. | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | This filing. | ||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | This filing. | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | This filing. | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | This filing. |
| * | All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document. Omitted numbers in the sequence refer to documents previously filed as an exhibit. |
| *** | Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability. |
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SIGNATURE PAGE
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 hereunto duly authorized.
| INVESTVIEW, INC. | ||
| Dated: November 13, 2024 | By: | /s/ Victor M. Oviedo |
| Victor M. Oviedo | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: November 13, 2024 | By: | /s/ Ralph R. Valvano |
| Ralph R. Valvano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Accounting Officer) | ||
| 34 |