INVU 10-Q
Investview, Inc. (INVU)
U.S. Securities and Exchange Commission
Washington, DC 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) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
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 Act).
| Yes | ☐ | ☒ |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 15, 2022, there were shares of common stock, $0.001 par value, outstanding.
INVESTVIEW, INC.
Form 10-Q for the Six Months Ended June 30, 2022
Table of Contents
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
INVESTVIEW, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30 | December 31, | |||||||
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Prepaid assets | ||||||||
| Receivables | ||||||||
| Inventory | ||||||||
| Income tax paid in advance | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Other assets: | ||||||||
| Restricted cash, long term | ||||||||
| Other restricted assets, long term | ||||||||
| Operating lease right-of-use asset | ||||||||
| Intangible asset, net | ||||||||
| Deposits | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Payroll liabilities | ||||||||
| Income tax payable | ||||||||
| Customer advance | ||||||||
| Deferred revenue | ||||||||
| Derivative liability | ||||||||
| Dividend liability | ||||||||
| Operating lease liability, current | ||||||||
| Related party payables, net of discounts, current | ||||||||
| Debt, net of discounts, current | ||||||||
| Total current liabilities | ||||||||
| Deferred tax liability, long term | ||||||||
| Operating lease liability, long term | ||||||||
| Related party payables, 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 June 30, 2022 and December 31, 2021, respectively | ||||||||
| Common stock, par value $; shares authorized; and shares issued and outstanding as of June 30, 2022 and December 31, 2021, 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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue: | ||||||||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | $ | $ | $ | ||||||||||||
| Mining revenue | ||||||||||||||||
| Cryptocurrency revenue | ||||||||||||||||
| Miner repair revenue | ||||||||||||||||
| Digital wallet revenue | ||||||||||||||||
| Fee 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 debt extinguishment | ||||||||||||||||
| 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 | $ | ( | ) | $ | $ | $ | ||||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||
| Foreign currency translation adjustments | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Total other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive income (loss) | $ | ( | ) | $ | $ | $ | ||||||||||
| 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 SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Paid in | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Preferred stock issued for cash | - | |||||||||||||||||||||||||||||||
| Preferred stock issued for cryptocurrency | - | |||||||||||||||||||||||||||||||
| Preferred stock issued for debt | - | |||||||||||||||||||||||||||||||
| Derivative liability recorded for warrants issued with preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Common stock cancelled | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Common stock issued for services | - | - | ||||||||||||||||||||||||||||||
| Beneficial conversion feature | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Preferred stock issued for cash | - | |||||||||||||||||||||||||||||||
| Preferred stock issued for cryptocurrency | - | |||||||||||||||||||||||||||||||
| Common stock issued for services and compensation | - | |||||||||||||||||||||||||||||||
| Common stock issued for warrant exercise | - | |||||||||||||||||||||||||||||||
| Derivative liability recorded for warrants issued with preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Derivative liability extinguished for warrants exercised | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock repurchased from related parties | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Common stock cancelled | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services and compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock cancelled | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Contribution of crypto currency from related party | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
INVESTVIEW INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | $ | ||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of intangible assets | ||||||||
| Stock issued for services and compensation | ||||||||
| Lease cost, net of repayment | ( | ) | ||||||
| (Gain) loss on debt extinguishment | ( | ) | ( | ) | ||||
| (Gain) loss on disposal of fixed 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 | ||||||||
| Short-term advances | ||||||||
| Short-term advances from related parties | ||||||||
| Income tax paid in advance | ( | ) | ||||||
| Other current assets | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Income tax payable | ( | ) | ||||||
| Customer advance | ||||||||
| Deferred revenue | ( | ) | ||||||
| Deferred tax liability | ||||||||
| 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: | ||||||||
| Proceeds from related party payables | ||||||||
| Repayments for related party payables | ( | ) | ( | ) | ||||
| Repayments for debt | ( | ) | ( | ) | ||||
| Payments for share repurchase | ( | ) | ||||||
| Dividends paid | ( | ) | ( | ) | ||||
| Proceeds from the sale of preferred stock | ||||||||
| Proceeds from the exercise of warrants | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate translation on cash | ( | ) | ( | ) | ||||
| 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: | ||||||||
| Cancellation of shares | $ | $ | ||||||
| Beneficial conversion feature | $ | $ | ||||||
| Derivative liability recorded for warrants issued | $ | $ | ||||||
| Derivative liability extinguished with warrant exercise | $ | $ | ||||||
| Preferred shares issued in exchange for cryptocurrency | $ | $ | ||||||
| Preferred shares issued in exchange for debt | $ | $ | ||||||
| Dividends declared | $ | $ | ||||||
| Dividends paid with cryptocurrency | $ | $ | ||||||
| Debt and related party debt extinguished in exchange for cryptocurrency | $ | $ | ||||||
| Related party debt extinguished in exchange for cryptocurrency | $ | $ | ||||||
| Initial right of use asset and lease liability | $ | $ | ||||||
| Purchase of fixed assets with cryptocurrency | $ | $ | ||||||
| Transfer of fixed assets to inventory | $ | $ | ||||||
| Contribution of crypto currency from related party | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(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 % of the outstanding securities of Wealth Generators in exchange for an aggregate of shares of our common stock. Following this transaction, Wealth Generators became our wholly owned subsidiary, and the former members of Wealth Generators became our stockholders and controlled the majority of our outstanding common stock.
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 financial technology (FinTech) services company in several different businesses. We deliver multiple products and services through a direct selling network, also known as multi-level marketing, of independent distributors that offer our products and services through a subscription-based revenue model to our distributors, as well as by our distributors to a large base of customers that we refer to as “members”. Through this business, we provide research, education, and investment tools designed to assist the self-directed investor in successfully navigating the financial markets. These services include research and education regarding equities, options, FOREX, ETFs, binary options, and cryptocurrency. In addition to research and education, we also offer full education and software applications to assist the individual in debt reduction, increased savings, budgeting, and proper tax management. Each product subscription includes a core set of trading tools and research along with the personal finance management suite to provide an individual with complete access to the information necessary to cultivate and manage his or her financial situation. In addition to our education subscriptions, through a distribution arrangement we have with a third party, we have provided our members with an opportunity to purchase through such third party, a specialty form of adaptive digital currency called “ndau”. Through our direct selling model, we compensate our distributors with commissions under a standard bonus plan that allows for discretionary bonuses based on performance.
We also operate a blockchain technology business that provides leading-edge research, development, and FinTech services involving the management of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. As well, in order to, among other things, commercialize on the proprietary trading platform we recently acquired from MPower Trading Systems, LLC, take advantage of the market’s increasing acceptance and expansion of the ownership and use of digital currencies as an investable asset class, subject to applicable regulatory limitations, and to proactively respond to increasing regulatory scrutiny relative to cryptocurrency products, we have adopted a growth plan that contemplates the establishment of a suite of financial service companies that will include self-directed brokerage services, institutional trade execution services, innovative advisory services (RIA, CTA), and codeless algorithmic trading technologies, which will operate under our recently formed subsidiary, Investview Financial Group Holdings, LLC (“IFGH”). Towards that end, in March 2021 we entered into an agreement to acquire a brokerage firm from an affiliate of the former Chief Executive Officer of the Company. However, having been unable to secure the requisite FINRA approval by the expiration date within the agreement, we terminated the transaction on June 14, 2022, and commenced a search for alternative acquisitions within the brokerage industry. Further, we have also recently withdrawn our state and NFA registrations associated with our wholly owned subsidiary, SAFE Management, LLC (“SAFE Management”), as we concluded there to be no material benefit to retaining an interest in a dormant investment advisor and commodity trading advisor. We plan to relaunch these services under the IFGH umbrella in the future to primarily focus on commodities and FOREX, however, most likely in conjunction with an acquisition within the brokerage industry.
| 7 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
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. Prior to September 20, 2021, we operated the Company on a March 31, fiscal year end. Effective September 30, 2021 we changed our fiscal year to December 31.
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 six months ended June 30, 2022, are not necessarily indicative of the operating results that may be expected for the filing of our December 31, 2022 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the audited December 31, 2021 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly Kuvera, LLC), Kuvera France S.A.S (through its closure date in June of 2021), Apex Tek, LLC (formerly Razor Data, LLC), SAFETek, LLC (formerly WealthGen Global, LLC), S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC, iGenius Global LTD (formerly Kuvera (N.I.) LTD), Investview Financial Group Holdings, LLC, and Investview MTS, LLC. All intercompany transactions and balances have been eliminated in consolidation.
| 8 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
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.
Foreign Exchange
We have consolidated the accounts of Kuvera France S.A.S. into our consolidated financial statements. The operations of Kuvera France S.A.S. were conducted in France through its closure date in June of 2021 and its functional currency is the Euro. Subsequent to June 2021 we maintained a Euro bank account in France that had minimal transactions. The Euro bank account was closed in April 2022.
Prior to June 2021, the financial statements of Kuvera France S.A.S. were prepared using their functional currency and were translated into U.S. dollars (“USD”). Assets and liabilities were translated into USD at the applicable exchange rates at period-end. Stockholders’ equity was translated using historical exchange rates. Revenue and expenses were translated at the average exchange rates for the period. Any translation adjustments were included as foreign currency translation adjustments in accumulated other comprehensive income in our stockholders’ equity (deficit).
Subsequent to June 2021 and prior to the closure of the Euro bank account, we translated all transactions in our Euro bank account into USD and translated the ending bank balance into USD at the applicable exchange rate at period-end.
The following rates were used to translate our Euro bank account into USD at the following balance sheet dates.
| December 31, 2021 | ||||
| Euro to USD | ||||
The following rates were used to translate the accounts of Kuvera France S.A.S. into USD for the following operating periods.
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Euro to USD | ||||||||
Concentration of Credit Risk
Financial
instruments that potentially expose us to concentration of credit risk include cash, accounts receivable, and advances. 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 June 30, 2022 and December 31, 2021, we had
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.
| 9 |
| June 30, 2022 | December 31, 2021 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Restricted cash, long term | ||||||||
| Total cash, cash equivalents, and restricted cash shown on the statement of cash flows | $ | $ | ||||||
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.
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 $
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) | June 30, 2022 | December 31, 2021 | ||||||||||
| Furniture, fixtures, and equipment | $ | $ | ||||||||||
| Computer equipment | ||||||||||||
| Leasehold improvements | ||||||||||||
| Data processing equipment | ||||||||||||
| Construction in progress | N/A | |||||||||||
| Mining repair tools and equipment | ||||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||||
| Net book value | $ | $ | ||||||||||
Total
depreciation expense for the six months ended June 30, 2022 and 2021, was $
Long-Lived Assets – Intangible Assets & License Agreement
We account for our cryptocurrencies, intangible assets and long-term license agreement 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.
| 10 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
We
hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as other assets. The value of our cryptocurrencies
as of June 30, 2022 and December 31, 2021 were $
In June of 2018 we purchased United Games, LLC and United League, LLC and recorded the transaction as a business combination. Intangible assets acquired in the business combination were recorded at fair value on the date of acquisition and were being amortized on a straight-line method over their estimated useful lives. The intangible assets were impaired during the year ended March 31, 2021 due to a lack of recoverability.
On
March 22, 2021, we entered into Securities Purchase Agreement to acquire the operating assets and intellectual property rights of MPower
Trading Systems LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members (see NOTE
12). On September 3, 2021, we closed on the Securities Purchase Agreement and acquired the operating assets and intellectual property
rights of MPower Trading Systems LLC. As a result, we obtained Prodigio, a proprietary software-based trading platform with applications
within the brokerage industry, which was valued at $
Impairment of Long-Lived Assets
We have adopted ASC Subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company 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.
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.
| 11 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
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. |
| 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, accounts payable, and debt. We have determined that the book value of our outstanding financial instruments as of June 30, 2022 and December 31, 2021, 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 June 30, 2022:
| 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, 2021:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
Revenue Recognition
Subscription Revenue
Most
of our revenue is generated by 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 June 30, 2022 and December 31, 2021 our deferred revenues were $
| 12 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
Mining Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we leased equipment under a sales-type lease through June of 2020. In June of 2020 we cancelled all leases and purchased all of the rights and obligations under the leases, which included obtaining ownership of all equipment. We use the equipment on blockchain networks to validate and add blocks of transactions to blockchain ledgers (commonly referred to as “mining”). As compensation for mining we are issued fees from processors and/or block rewards that are newly created cryptocurrency units granted to us. Our mining activities constitute our ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately granted to us as a result of our mining activities.
Cryptocurrency Revenue
We generate revenue from the sale of cryptocurrency
packages to our customers through an arrangement with third-party suppliers. The various packages include different amounts of coin with
differing rates of returns and terms and, in some cases prior to January 2022, include a product protection option that allows the purchaser to protect
their initial purchase price.
We recognize 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 is to arrange for the
third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers at the time
of order placement. All customers are given two weeks to request a refund, therefore we 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 suppliers to deliver
coin and protection (if applicable), at which time we recognize revenue and the amounts due to our suppliers on our books. As of June 30, 2022 and December 31,
2021 our customer advances related to cryptocurrency revenue were $
Fee Revenue
We generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee 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 deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory fees in the month following recognition.
Miner Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. We recognize 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 is to deliver the promised goods to our customers.
Digital Wallet Revenue
We generate revenue from the sale of digital wallets to our customers through an arrangement with a third-party supplier. We offer three tiers of wallets which include different features. The digital wallets are delivered by a third-party supplier.
We recognize digital wallet 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 arrange for the third-parties to provide the wallet to our customers and payment is received from our customers at the time of order placement.
| 13 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
Revenue generated for the six months ended June 30, 2022 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Digital Wallet Revenue | Total | |||||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
For
the six months ended June 30, 2022 foreign and domestic revenues were approximately $
Revenue generated for the six months ended June 30, 2021 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
For
the six months ended June 30, 2021 foreign and domestic revenues were approximately $
Revenue generated for the three months ended June 30, 2022 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Digital Wallet Revenue | Total | |||||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
For
the three months ended June 30, 2022 foreign and domestic revenues were approximately $
Revenue generated for the three months ended June 30, 2021 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
For
the three months ended June 30, 2021 foreign and domestic revenues were approximately $
Advertising, Selling, and Marketing Costs
We
expense advertising, selling, and marketing costs as incurred. Advertising, selling, and marketing costs include costs of promoting our
product worldwide, including promotional events. Advertising, selling, and marketing expenses for the six months ended June 30, 2022
and 2021, totaled $
| 14 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
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, hosting fees that we pay to vendors to set up our mining equipment at third-party sites in order to generate
mining revenue, and the costs associated with our miner repair revenue. Costs of sales and services for the six months ended June 30,
2022 and 2021, totaled $
Inventory
Inventory consists of raw materials and work in process to be sold as part of our miner repair revenue. 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.
Inventory was made up of the following at each balance sheet date:
| June 30, 2022 | December 31, 2021 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Total inventory | $ | $ | ||||||
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, including operating losses and credit carryforwards, 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 (“ASC 260-10”), which specifies the computation, presentation, and disclosure requirements of earnings per share information. Basic income (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.
The following table illustrates the computation of diluted earnings per share for the three months ended June 30, 2021. Due to the net loss for the three months ended June 30, 2022 there were potentially dilutive securities that were excluded from the diluted income per common share computation, as the effect of including these shares would be antidilutive.
| June 30, 2021 | ||||
| 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 warrants | ||||
| 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 | $ | |||
| 15 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
The following table illustrates the computation of diluted earnings per share for the six months ended June 30, 2022 and 2021, where no potentially dilutive securities were excluded from the computation:
| June 30, 2022 | June 30, 2021 | |||||||
| 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 warrants | ||||||||
| 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 | $ | $ | ||||||
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.
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
We have noted no 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 six months ended June 30, 2022 we reported $
| 16 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
NOTE 5 – RELATED-PARTY TRANSACTIONS
Our related-party payables consisted of the following:
| June 30, 2022 | December 31, 2021 | |||||||
| 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 $ | ||||||||
| Promissory note entered into on 12/15/20 [4] | ||||||||
| Convertible Promissory Note entered into on 3/30/21 [5] | ||||||||
| Working Capital Promissory Note entered into on 3/22/21 [6] | ||||||||
| Total related-party debt | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Related-party debt, long term | $ | $ | ||||||
| [1] | |
| [2] | |
| [3] | |
| [4] | |
| [5] |
| 17 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
| [6] |
In
addition to the above-mentioned related-party lending arrangements, during the six months ended June 30, 2022,
we entered into a Separation and Release Agreement (the “Separation Agreements”) with Mario Romano and Annette Raynor,
two of the Company’s founders and former members of management and the Board of Directors, and Wealth Engineering, LLC, an
affiliate of Mr. Romano and Ms. Raynor. Under the Separation Agreements, Mr. Romano and Ms. Raynor resigned their positions as
officers and directors of the Company effective immediately upon execution of the Separation Agreements as they each transitioned to
the roles of strategic advisors to the Company. In conjunction with the Separation Agreements Mr. Romano and Ms. Raynor forfeited
shares each, which were returned to the Company and cancelled, and we repurchased a total of
shares from Mr. Romano and Ms. Raynor in exchange for cash of $
In addition to the above-mentioned related-party lending arrangements, during the six months ended June 30, 2021, we recorded shares as forfeited as a result of 1) our Chief Financial Officer returning shares to the Company prior to their vesting date and 2) our senior management team and board of directors unanimously agreeing to surrender and terminate an aggregate of outstanding unvested restricted shares and ungranted shares in exchange for the issuance of options to purchase shares (see NOTE 9).
In
addition to the above-mentioned related-party lending arrangements, during the six months ended June 30, 2021 DBR Capital LLC elected
to contribute ndau coins to us. These coins were valued as of the day of receipt at $
NOTE 6 – DEBT
Our debt consisted of the following:
| June 30, 2022 | December 31, 2021 | |||||||
| 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] | |
| [2] |
| 18 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
NOTE 7 – DERIVATIVE LIABILITY
During the six months ended June 30, 2022, we had the following activity in our derivative liability account relating to our warrants:
| Derivative liability at December 31, 2021 | $ | |||
| Derivative liability recorded on new instruments | ||||
| Derivative liability reduced by warrant exercise (see NOTE 7) | ||||
| (Gain) loss on fair value | ( | ) | ||
| Derivative liability at June 30, 2022 | $ |
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 six months ended June 30, 2022, 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 August 2019 we entered an operating lease for office space in Eatontown, New Jersey (the “Eatontown Lease”), in September 2019 we entered an operating lease for office space in Kaysville, Utah (the “Kaysville Lease”), in May 2021 we entered an operating lease for office space in Conroe, Texas (the “Conroe Lease”), in July 2021 we entered an operating lease for office space in Wyckoff, New Jersey (the “Wyckoff Lease”), and in September 2021 we acquired an operating lease for office space in Haverford, Pennsylvania (the “Haverford Lease”) in connection with the MPower acquisition (See NOTE 12).
At
commencement of the Eatontown Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
commencement of the Kaysville Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
commencement of the Conroe Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
commencement of the Wyckoff Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
| 19 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
At
date of acquisition of the Haverford lease, right-of-use assets and lease liabilities obtained amounted to $
Operating
lease expense was $
Future minimum lease payments under non-cancellable leases as of June 30, 2022 were as follows:
| Remainder of 2022 | $ | |||
| 2023 | ||||
| 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
During
the year ended March 31, 2021 we commenced a security offering to sell a total of units at $ per unit (“Unit Offering”),
such that each unit consisted of:
During the six months ended June 30, 2021 we sold units for a total
of $
As of June 30, 2022 and December 31, 2021, we had shares of preferred stock issued and outstanding.
Preferred Stock Dividends
During
the six months ended June 30, 2022, we recorded $
Common Stock
During
the six months ended June 30, 2022, we cancelled shares that had been issued but were forfeited
by choice or as a result of certain forfeiture conditions (see NOTE 5). As a result, we decreased common stock by $creased additional paid in capital by the
same. As of the date of this filing, shares of common stock forfeited during the nine
months ended December 31, 2021 had not yet been physically cancelled due to administrative delays. All forfeited shares have been deemed
cancelled as of June 30, 2022. Also, during the six months ended June 30, 2022, we repurchased shares from members of our then Board of Directors
in exchange for cash of $
| 20 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
During
the six months ended June 30, 2021, we cancelled shares that had been issued but were subject to certain forfeiture conditions.
As a result of the forfeiture, we decreased common stock by $
As of June 30, 2022 and December 31, 2021, we had and shares of common stock issued and outstanding, respectively.
Options
During
the six months ended June 30, 2022, we undertook to restructure unvested incentive equity awards previously granted to our senior
leadership team. The Company’s senior management team and board of directors unanimously agreed to surrender and terminate an
aggregate of
outstanding unvested restricted shares and ungranted shares in exchange for the issuance of options to purchase
shares, vesting in equal amounts over a period, at an exercise price of $
Warrants
Transactions involving our warrants are summarized as follows:
| Weighted | ||||||||
| Number of | Average | |||||||
| Shares | Exercise Price | |||||||
| Warrants outstanding at December 31, 2021 | $ | |||||||
| Granted | $ | |||||||
| Canceled/Expired | $ | |||||||
| Exercised | $ | |||||||
| Warrants outstanding at June 30, 2022 | $ | |||||||
Details of our warrants outstanding as of June 30, 2022 is as follows:
| Exercise Price | Warrants Outstanding | Warrants Exercisable | Weighted Average Contractual Life (Years) | |||||||||||
| $ | ||||||||||||||
Class B Units of Investview Financial Group Holdings, LLC
As
of June 30, 2022 and December 31, 2021 there were
| 21 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
(Unaudited)
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Legal Proceedings
In the ordinary course of business, we may be, or have been, involved in legal proceedings. During the six months ended June 30, 2022 we were not involved in any material legal proceedings, however, during November 2021 we received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. We have reason to believe that the focus of the SEC’s inquiry involves whether certain federal securities laws were violated in connection with, among other things, the offer and sale of cryptocurrency products and the operation of our subscription-based multi-level marketing business now known as iGenius. 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. We believe that we have complied at all times with the federal securities laws. However, we are aware of the evolving SEC commentary and rulemaking process relative to the characterization of cryptocurrency products under federal securities laws that is sweeping through a large number of businesses that operate within the cryptocurrency sector. We intend to cooperate fully with the SEC’s investigation and will continue to work with outside counsel to review the matter.
We generate revenue from the sale of cryptocurrency
packages to our customers through an arrangement with third-party suppliers, certain of which, until January 2022, included a product
protection option provided by a third-party provider.
NOTE 11 – INCOME TAXES
For the periods ended June 30, 2022, and June 30, 2021, 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 six months ended June 30, 2022 was $
NOTE 12 – ACQUISITION & NONCONTROLLING INTEREST IN SUBSIDIARY
On
March 22, 2021, we entered into a Securities Purchase Agreement to purchase the operating assets and intellectual property rights of
MPower Trading Systems, LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members,
in exchange for nonvoting Class B Units of Investview Financial Group Holdings, LLC (“Units”). This acquisition
closed on September 3, 2021, and we acquired an office lease, furniture and fixtures, and Prodigio, a proprietary software-based trading
platform with applications in the brokerage industry. The Units can be exchanged at any time, within
The
Company determined that as of the date of the acquisition, the fair value of the Prodigio Trading Platform software was $
| Purchase price (fair value of Units) | $ | |||
| Intangible asset (Prodigio software) | ||||
| Loss on asset acquisition | $ |
NOTE 13 – 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 there are no subsequent events that require disclosure other than the following:
Effective August 12, 2022 we entered into a Fourth Amendment to the Amended and Restated Securities Purchase Agreement dated as of November 9, 2020. The new amendment changes the deadlines for the fourth and fifth closings under the Agreement from December 31, 2022, to December 31, 2024.
| 22 |
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 that involve risks and uncertainties. When the words “believe,” “expect,” “plan,” “project,” “estimate,” and similar expressions are used, they 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 in our periodic reports filed with the Securities and Exchange Commission (“SEC”). The forward-looking statements included in this report are made only as of the date of this report. We disclaim any obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise.
Business Overview
We operate a financial technology (FinTech) services company in several different businesses. We deliver multiple products and services through a direct selling network, also known as multi-level marketing, of independent distributors that offer our products and services through a subscription-based revenue model to our distributors, as well as by our distributors to a large base of customers that we refer to as “members”. Through this business, we provide research, education, and investment tools designed to assist the self-directed investor in successfully navigating the financial markets. These services include research and education regarding equities, options, FOREX, ETFs, binary options, and cryptocurrency. In addition to research and education, we also offer full education and software applications to assist the individual in debt reduction, increased savings, budgeting, and proper tax management. Each product subscription includes a core set of trading tools and research along with the personal finance management suite to provide an individual with complete access to the information necessary to cultivate and manage his or her financial situation. In addition to our education subscriptions, through a distribution arrangement we have with a third party, we have provided our members with an opportunity to purchase through such third party, a specialty form of adaptive digital currency called “ndau”. Through our direct selling model, we compensate our distributors with commissions under a standard bonus plan that allows for discretionary bonuses based on performance.
We also operate a blockchain technology business that provides leading-edge research, development, and FinTech services involving the management of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. As well, in order to, among other things, commercialize on the proprietary trading platform we recently acquired from MPower Trading Systems, LLC, take advantage of the market’s increasing acceptance and expansion of the ownership and use of digital currencies as an investable asset class, subject to applicable regulatory limitations, and to proactively respond to increasing regulatory scrutiny relative to cryptocurrency products, we have adopted a growth plan that contemplates the establishment of a suite of financial service companies that will include self-directed brokerage services, institutional trade execution services, innovative advisory services (RIA, CTA), and codeless algorithmic trading technologies, which will operate under our recently formed subsidiary, Investview Financial Group Holdings, LLC (“IFGH”). Towards that end, in March 2021 we entered into an agreement to acquire a brokerage firm from an affiliate of the former Chief Executive Officer of the Company. However, having been unable to secure the requisite FINRA approval by the expiration date within the agreement, we terminated the transaction on June 14, 2022, and commenced a search for alternative acquisitions within the brokerage industry. Further, we have also recently withdrawn our state and NFA registrations associated with our wholly owned subsidiary, SAFE Management, LLC (“SAFE Management”), as we concluded there to be no material benefit to retaining an interest in a dormant investment advisor and commodity trading advisor. We plan to relaunch these services under the IFGH umbrella in the future to primarily focus on commodities and FOREX, however, most likely in conjunction with an acquisition within the brokerage industry.
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Results of Operations
Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021
Revenues
| Three Months Ended June 30, | Increase | |||||||||||
| 2022 | 2021 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 11,104,539 | $ | 10,849,697 | $ | 254,842 | ||||||
| Mining revenue | 3,058,144 | 8,371,562 | (5,313,418 | ) | ||||||||
| Cryptocurrency revenue | 516,960 | 6,405,306 | (5,888,346 | ) | ||||||||
| Miner repair revenue | 80,110 | - | 80,110 | |||||||||
| Digital wallet revenue | 5,868 | - | 5,868 | |||||||||
| Total revenue, net | $ | 14,765,621 | $ | 25,626,565 | $ | (10,860,944 | ) | |||||
Revenue, net, decreased $10,860,944, or 42%, from $25,626,565 for the three months ended June 30, 2021, to $14,765,621 for the three months ended June 30, 2022. The decrease can be explained by $5.3 million and $5.8 million decreases in our mining revenue and cryptocurrency revenue, respectively, offset by a $255 thousand increase in our net subscription revenue. The $255 thousand (2%) increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the $5.3 million (63%) decrease in mining revenue was a result of the decrease in the value of Bitcoin and an increase in the Bitcoin mining difficulty levels, as well as, older and less efficient Bitcoin mining equipment taken offline for repairs during the period; and the $5.8 million decrease in cryptocurrency revenue was due to an overall decrease in the number of sales of NDAU.
Operating Costs and Expenses
| Three Months Ended June 30, | Increase | |||||||||||
| 2022 | 2021 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Cost of sales and service | $ | 1,898,140 | $ | 2,186,152 | $ | (288,012 | ) | |||||
| Commissions | 6,445,793 | 8,782,421 | (2,336,628 | ) | ||||||||
| Selling and marketing | 23,511 | 39,849 | (16,338 | ) | ||||||||
| Salary and related | 1,641,345 | 1,372,325 | 269,020 | |||||||||
| Professional fees | 770,345 | 661,884 | 108,461 | |||||||||
| Impairment expense | 6,383 | - | 6,383 | |||||||||
| Loss (gain) on disposal of assets | (247,209 | ) | - | (247,209 | ) | |||||||
| General and administrative | 2,627,884 | 2,046,484 | 581,400 | |||||||||
| Total operating costs and expenses | $ | 13,166,192 | $ | 15,089,115 | $ | (1,922,923 | ) | |||||
Operating costs decreased $1,922,923, or 13%, from $15,089,115 for the three months ended June 30, 2021, to $13,166,192 for the three months ended June 30, 2022. We experienced a decrease in commissions of $2.3 million, which was a result of decreases in our cryptocurrency revenue, a decrease in our cost of sales and services of $288 thousand due to the relocation of our miners and a related decrease in our mining costs that included hosting, electrical and power costs, and a $247 thousand increase in gain on disposal of assets, where in the current period we sold assets with a total net book value of $371 thousand for cash of $618 thousand, with no similar sales occurring in the prior period. These decreases were offset by an increase in salary and related of $269 thousand as a result of general growth in the company, an increase in professional fees of $108 thousand due to higher legal fees, and an increase in general and administrative costs of $581 thousand which was mainly driven by depreciation, as we purchased and deployed additional mining equipment during the current period, partially offset by lower banking fees.
Other Income and Expenses
| Three Months Ended June 30, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Gain (loss) on debt extinguishment | $ | 455 | $ | 4,001 | $ | (3,546 | ) | |||||
| Gain (loss) on fair value of derivative liability | 61,679 | 236,648 | (174,969 | ) | ||||||||
| Realized gain (loss) on cryptocurrency | (837,808 | ) | (1,282,970 | ) | 445,162 | |||||||
| Interest expense | (4,675 | ) | (5,934 | ) | 1,246 | |||||||
| Interest expense, related parties | (309,669 | ) | (759,686 | ) | 450,017 | |||||||
| Other income (expense) | 26,626 | 46,338 | (19,712 | ) | ||||||||
| Total other income (expense) | $ | (1,063,392 | ) | $ | (1,761,603 | ) | $ | 698,211 | ||||
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We recorded other expense of $1,063,392 for the three months ended June 30, 2022, which was a difference of $698,211, or 40%, from the prior period other expense of $1,761,603. The change is due to a realized loss recorded on cryptocurrency in the current period of $837 thousand compared to a realized loss of $1.3 million in the prior period, plus related party interest expense recorded in current period versus the prior period ($310 thousand for the three months ended June 30, 2022 compared to $760 thousand for the three months ended June 30, 2021), offset by a gain on fair value of derivative liability in the current period of $62 thousand compared to a gain of $237 thousand in the prior period.
Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021
Revenues
| Six Months Ended June 30, | Increase | |||||||||||
| 2022 | 2021 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 24,835,209 | $ | 18,799,414 | $ | 6,035,795 | ||||||
| Mining revenue | 6,635,117 | 16,708,921 | (10,073,804 | ) | ||||||||
| Cryptocurrency revenue | 957,376 | 7,170,168 | (6,212,792 | ) | ||||||||
| Miner repair revenue | 80,110 | - | 80,110 | |||||||||
| Digital wallet revenue | 5,868 | - | 5,868 | |||||||||
| Fee revenue | - | 2,032 | (2,032 | ) | ||||||||
| Total revenue, net | $ | 32,513,680 | $ | 42,680,535 | $ | (10,166,855 | ) | |||||
Revenue, net, decreased $10,166,855, or 24%, from $42,680,535 for the six months ended June 30, 2021, to $32,513,680 for the six months ended June 30, 2022. The decrease can be explained by $10.1 million and $6.2 million decreases in our mining revenue and cryptocurrency revenue, respectively, offset by a $6.0 million increase in our net subscription revenue. The $6.0 million (32%) increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the $10.1 million (60%) decrease in mining revenue was a result of the decrease in the value of Bitcoin and an increase in the Bitcoin mining difficulty levels, as well as, older and less efficient Bitcoin mining equipment taken offline for repairs during the period; and the $6.2 million decrease in cryptocurrency revenue was due to an overall decrease in the number of sales of NDAU.
Operating Costs and Expenses
| Six Months Ended June 30, | Increase | |||||||||||
| 2022 | 2021 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Cost of sales and service | $ | 3,728,481 | $ | 5,084,659 | $ | (1,356,178 | ) | |||||
| Commissions | 13,829,481 | 13,867,300 | (37,819 | ) | ||||||||
| Selling and marketing | 35,265 | 67,500 | (32,235 | ) | ||||||||
| Salary and related | 2,856,608 | 2,562,466 | 294,142 | |||||||||
| Professional fees | 1,749,320 | 1,312,365 | 436,955 | |||||||||
| Impairment expense | 6,383 | 534,438 | (528,055 | ) | ||||||||
| Loss (gain) on disposal of assets | (271,509 | ) | - | (271,509 | ) | |||||||
| General and administrative | 4,695,700 | 3,863,881 | 831,819 | |||||||||
| Total operating costs and expenses | $ | 26,629,729 | $ | 27,292,609 | $ | (662,880 | ) | |||||
Operating costs decreased $662,880, or 2%, from $26,929,729 for the six months ended June 30, 2021, to $26,078,383 for the six months ended June 30, 2022. We experienced a decrease in our cost of sales and services of $1.4 million due to the relocation of our miners and a related decrease in our mining costs that included hosting, electrical and power costs, a decrease in impairment expense of $528 thousand where in the prior period we wrote-off $534 thousand of intangible assets as a result of recoverability issues, with only a $6 thousand write-off of fixed assets occurring in the current period, and a $272 thousand increase in gain on disposal of assets, where in the current period we sold assets with a total net book value of $375 thousand for cash of $647 thousand, with no similar sales occurring in the prior period. These decreases were offset by an increase in salary and related of $294 thousand as a result of general growth in the company, an increase in professional fees of $437 thousand due to higher legal fees, and an increase in general and administrative costs of $832 thousand which was mainly driven by depreciation, as we purchased and deployed additional mining equipment during the current period, partially offset by lower banking fees.
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Other Income and Expenses
| Six Months Ended June 30, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Gain (loss) on debt extinguishment | $ | 455 | $ | 411,803 | $ | (411,348 | ) | |||||
| Gain (loss) on fair value of derivative liability | 37,836 | 51,911 | (14,075 | ) | ||||||||
| Realized gain (loss) on cryptocurrency | (1,020,597 | ) | (758,758 | ) | (261,839 | ) | ||||||
| Interest expense | (9,298 | ) | (11,803 | ) | 2,505 | |||||||
| Interest expense, related parties | (2,029,134 | ) | (1,133,766 | ) | (895,368 | ) | ||||||
| Other income (expense) | 57,853 | (86,902 | ) | 144,755 | ) | |||||||
| Total other income (expense) | $ | (2,962,885 | ) | $ | (1,527,515 | ) | $ | (1,435,370 | ) | |||
We recorded other expense of $2,962,885 for the six months ended June 30, 2022, which was a difference of $1,435,370, or 94%, from the prior period other expense of $1,527,515. The change is due to a minimal gain on debt extinguishment recorded in the current period compared to a gain of $412 thousand recorded in the prior period, a realized loss recorded on cryptocurrency in the current period of $1.0 million compared to a realized loss of $759 thousand in the prior period, and more related party interest expense recorded in current period versus the prior period ($2.0 million for the six months ended June 30, 2022 compared to $1.1 million for the six months ended June 30, 2021). Amounts recorded in related party interest expense included the amortization of debt discounts, which was being recognized over the term of the debt, however, during the six months ended June 30, 2022 we repaid two of our related party notes early, which resulted in the recognition of $1.2 million of the amortization of the related debt discount amounts into interest.
Liquidity and Capital Resources
During the six months ended June 30, 2022, we recorded net income of $2,279,321 and generated $4,491,640 in cash through our operating activities. We used this cash to fund operations, fund the purchase of $11,187,053 worth of fixed assets, to repay $2,493,013 worth of related party payable, and to repurchase shares for $1,724,008. As a result, our cash, cash equivalents, and restricted cash decreased by $11,059,490 to $21,557,416 as compared to $32,616,906 at the beginning of the fiscal year. As of June 30, 2022, our current assets exceeded our current liabilities to result in working capital of $15,509,390.
Critical Accounting Policies
Basis of Presentation
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. Prior to September 20, 2021 we operated the Company on a March 31, fiscal year end. Effective September 30, 2021 we changed our fiscal year to December 31.
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 six months ended June 30, 2022, are not necessarily indicative of the operating results that may be expected for the filing of our December 31, 2022 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2021 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly Kuvera, LLC), Kuvera France S.A.S (through its closure date in June of 2021), Apex Tek, LLC (formerly Razor Data, LLC), SAFETek, LLC (formerly WealthGen Global, LLC), S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC, iGenius Global LTD (formerly Kuvera (N.I.) LTD), Investview Financial Group Holdings, LLC, and Investview MTS, LLC. All intercompany transactions and balances have been eliminated in consolidation.
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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.
Revenue Recognition
Subscription Revenue
Most of our revenue is generated by 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 June 30, 2022 and December 31, 2021 our deferred revenues were $2,659,069 and $3,288,443, respectively.
Mining Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we leased equipment under a sales-type lease through June of 2020. In June of 2020 we cancelled all leases and purchased all of the rights and obligations under the leases, which included obtaining ownership of all equipment. We use the equipment on blockchain networks to validate and add blocks of transactions to blockchain ledgers (commonly referred to as “mining”). As compensation for mining we are issued fees from processors and/or block rewards that are newly created cryptocurrency units granted to us. Our mining activities constitute our ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately granted to us as a result of our mining activities.
Cryptocurrency Revenue
We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party suppliers. The various packages include different amounts of coin with differing rates of returns and terms and, in some cases prior to January 2022, include a product protection option that allows the purchaser to protect their initial purchase price. The protection allows the purchaser to obtain 50% of their purchase price at five years or 100% of their purchase price at ten years. Both the coin and protection option are delivered by third-party suppliers.
We recognize 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 is to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers at the time of order placement. All customers are given two weeks to request a refund, therefore we 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 suppliers to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our suppliers on our books. As of June 30, 2022 and December 31, 2021 our customer advances related to cryptocurrency revenue were $301,399 and $75,702, respectively.
Fee Revenue
We generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee 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 deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory fees in the month following recognition.
Miner Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. We recognize 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 is to deliver the promised goods to our customers.
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Digital Wallet Revenue
We generate revenue from the sale of digital wallets to our customers through an arrangement with a third-party supplier. We offer three tiers of wallets which include different features. The digital wallets are delivered by a third-party supplier.
We recognize digital wallet 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 arrange for the third-parties to provide the wallet to our customers and payment is received from our customers at the time of order placement.
Revenue generated for the six months ended June 30, 2022 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Digital Wallet Revenue | Total | |||||||||||||||||||
| Gross billings/receipts | $ | 26,448,766 | $ | 1,874,382 | $ | 6,635,117 | $ | 80,110 | $ | 7,157 | $ | 35,045,532 | ||||||||||||
| Refunds, incentives, credits, and chargebacks | (1,613,557 | ) | - | - | - | - | (1,613,557 | ) | ||||||||||||||||
| Amounts paid to providers | - | (917,006 | ) | - | - | (1,289 | ) | (918,295 | ) | |||||||||||||||
| Net revenue | $ | 24,835,209 | $ | 957,376 | $ | 6,635,117 | $ | 80,110 | $ | 5,868 | $ | 32,513,680 | ||||||||||||
For the six months ended June 30, 2022 foreign and domestic revenues were approximately $21.9 million and $10.6 million, respectively.
Revenue generated for the six months ended June 30, 2021 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 19,939,584 | $ | 17,752,763 | $ | 16,708,921 | $ | 2,032 | $ | 54,403,300 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (1,140,170 | ) | - | - | - | (1,140,170 | ) | |||||||||||||
| Amounts paid to providers | - | (10,582,595 | ) | - | - | (10,582,595 | ) | |||||||||||||
| Net revenue | $ | 18,799,414 | $ | 7,170,168 | $ | 16,708,921 | $ | 2,032 | $ | 42,680,535 | ||||||||||
For the six months ended June 30, 2021 foreign and domestic revenues were approximately $19.4 million and $23.3 million, respectively.
Revenue generated for the three months ended June 30, 2022 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Digital Wallet Revenue | Total | |||||||||||||||||||
| Gross billings/receipts | $ | 11,754,793 | $ | 1,035,960 | $ | 3,058,144 | $ | 80,110 | $ | 7,157 | $ | 15,936,164 | ||||||||||||
| Refunds, incentives, credits, and chargebacks | (650,254 | ) | - | - | - | - | (650,254 | ) | ||||||||||||||||
| Amounts paid to providers | - | (519,000 | ) | - | - | (1,289 | ) | (520,289 | ) | |||||||||||||||
| Net revenue | $ | 11,104,539 | $ | 516,960 | $ | 3,058,144 | $ | 80,110 | $ | 5,868 | $ | 14,765,621 | ||||||||||||
For the three months ended June 30, 2022 foreign and domestic revenues were approximately $9.9 million and $4.9 million, respectively.
Revenue generated for the three months ended June 30, 2021 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 11,532,061 | $ | 15,875,577 | $ | 8,371,562 | $ | - | $ | 35,779,200 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (682,364 | ) | - | - | - | (682,364 | ) | |||||||||||||
| Amounts paid to providers | - | (9,470,271 | ) | - | - | (9,470,271 | ) | |||||||||||||
| Net revenue | $ | 10,849,697 | $ | 6,405,306 | $ | 8,371,562 | $ | - | $ | 25,626,565 | ||||||||||
For the three months ended June 30, 2021 foreign and domestic revenues were approximately $11.8 million and $13.8 million, respectively.
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Recently Issued Accounting Pronouncements
We have noted no 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 acting 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 acting 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 June 30, 2022, 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
From time to time, the Company and our operating subsidiaries are involved in claims, proceedings and litigation, and subject to certain material risk factors, including those matters set forth in Item 3 of our Annual Report on Form 10-KT for the nine months ended December 31, 2021, as well as in any other reports filed by us with the Securities and Exchange Commission.
ITEM 1.A – RISK FACTORS
Our business could be negatively affected if any of the third-party providers of products or services offered through our membership packages default on their obligation to our customers.
We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party suppliers, certain of which, until January 2022, included a product protection option provided by a third-party provider. According to marketing and legal documents provided by such third-party provider, the product protection would allow the purchaser to protect its initial purchase price by obtaining 50% of its purchase price at five years or 100% of its purchase price at ten years. In January 2022, we suspended any further offering of the product protection option in the cryptocurrency packages after the third-party provider was unable to comply with our standard vendor compliance protocols, citing certain offshore confidentiality entitlements. That suspension will remain in place until we are able to further validate the continued integrity of the product protection and the vendor’s ability to honor its commitments to our members. We cannot ensure that such third-party provider will comply with its contractual requirements to our customers or with applicable laws, rules, and regulations. Any significant failures by it could cause us to incur losses and could harm our reputation. In addition, failure of such third-party supplier to comply with its contractual requirements could cause our members to not achieve the level of return on their investments expected, and possibly expose us to claims that could adversely damage our reputation, and have an adverse effect on our business, financial condition, and operating results.
Loss of a critical banking relationship could adversely impact our business, operating results, and financial condition.
Financial institutions in the United States and globally may, as a result of the myriad of regulations or the risks of crypto assets generally, decide to not provide account or other financial services to us or the cryptocurrency industry generally. Our current banking partner has recently notified us that it will be terminating its relationship with us. Although no specific explanation was offered, we have reason to believe it was due to the commonly perceived banking risk associated with the handling funds generated within the cryptocurrency business. The loss of this banking partner may increase our operating costs as well as pose additional operational, logistical and security challenges as well as regulatory risks. As well, it may complicate our efforts to establish or maintain new banking relationships. Although we are cautiously optimistic that we will be able to find an alternative banking source, an inability to establish a suitable commercial banking relationship for more than the short-term could have a material adverse impact upon our business.
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-KT for the nine months ended December 31, 2021.
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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
On June 24, 2022, we undertook to restructure unvested incentive equity awards previously granted to our senior leadership team. The Company’s senior management team and board of directors unanimously agreed to surrender and terminate an aggregate of approximately 288 million outstanding unvested restricted shares in exchange for the issuance of options to purchase approximately 360 million shares, vesting in equal amounts over a five-year period, at an exercise price of $0.05 per share, or approximately a 66% premium over the closing price of the Company’s shares on Thursday, June 23, 2022. The exercise price and number of options into which the unvested restricted shares were surrendered (based on an exchange ratio of 1.25 to 1) were established by an independent valuation firm engaged by the Company that applied relevant valuation methodologies in a manner consistent with the Company’s recently completed December 31, 2021 audit. Of particular note, the shares issuable, if at all, upon exercise of the options, remain subject to the terms of the Company’s existing lock-up agreement through April 2025.
On August 12, 2022, we and DBR Capital, LLC, entered into a Fourth Amendment to the Amended and Restated Securities Purchase Agreement dated as of November 9, 2020 (the “Agreement”). The new amendment changes the deadlines for the fourth and fifth closings under the 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.
ITEM 6 – EXHIBITS
The following exhibits are filed as a part of this report:
| 30 |
| 31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | This filing. | ||
| Item 32 | Section 1350 Certifications | |||
| 32.01 | Certification of Acting 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. |
| 31 |
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: August 15, 2022 | By: | /s/ Victor M. Oviedo |
| Victor M. Oviedo | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: August 15, 2022 | By: | /s/ Ralph R. Valvano |
| Ralph R. Valvano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Accounting Officer) | ||
| 32 |