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 November 10, 2023, there were shares of common stock, $0.001 par value, outstanding.
INVESTVIEW, INC.
Form 10-Q for the Nine Months Ended September 30, 2023
Table of Contents
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
INVESTVIEW, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (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 | ||||||||
| 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 debt, net of discounts, current | ||||||||
| Debt, net of discounts, current | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, long term | ||||||||
| Accrued liabilities, long term | ||||||||
| Related party debt, net of discounts, long term | ||||||||
| Debt, net of discounts, long term | ||||||||
| Total long term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, par value: $; shares authorized, and issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| Common stock, par value $; shares authorized; and shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
INVESTVIEW, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | $ | $ | $ | ||||||||||||
| Mining revenue | ||||||||||||||||
| Cryptocurrency revenue | ||||||||||||||||
| Mining equipment repair revenue | ||||||||||||||||
| Digital wallet 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 NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Paid in | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2021 | | $ | | | $ | | $ | | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
| Common stock issued for services and other stock based 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 other stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock cancelled | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Contribution of crypto currency from related party | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services and other stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Warrant Exercise | - | |||||||||||||||||||||||||||||||
| Derivative liability extinguished with warrant exercise | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services and other stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services and other stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock purchased and canceled | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
INVESTVIEW INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | $ | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of debt discount | ||||||||
| Stock issued for services and other stock based compensation | ||||||||
| Lease cost, net of repayment | ( | ) | ||||||
| (Gain) loss on debt extinguishment | ( | ) | ||||||
| (Gain) loss on disposal of assets | ( | ) | ||||||
| (Gain) loss on fair value of derivative liability | ( | ) | ( | ) | ||||
| Realized (gain) loss on cryptocurrency | ( | ) | ||||||
| Impairment expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaid assets | ( | ) | ( | ) | ||||
| Income tax paid in advance | ( | ) | ||||||
| Other current assets | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Income tax payable | ( | ) | ||||||
| Customer advance | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| 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: | ||||||||
| Repayments for related party debt | ( | ) | ( | ) | ||||
| Repayments for debt | ( | ) | ( | ) | ||||
| Payments for share repurchase | ( | ) | ||||||
| Dividends paid | ( | ) | ( | ) | ||||
| 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: | ||||||||
| Common stock purchased and canceled | $ | $ | ||||||
| Derivative liability extinguished with warrant exercise | $ | $ | ||||||
| Dividends declared | $ | $ | ||||||
| Dividends paid with cryptocurrency | $ | $ | ||||||
| Debt and related party debt extinguished in exchange for cryptocurrency | $ | $ | ||||||
| Recognition of lease liability and ROU assets at lease commencement | $ | $ | ||||||
| Cryptocurrency received from sale of fixed assets | $ | $ | ||||||
| Purchase of fixed assets with cryptocurrrency | $ | $ | ||||||
| Transfer of fixed assets to inventory | $ | $ | ||||||
| Contribution of cryptocurrency 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 SEPTEMBER 30, 2023
(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 trading research and education, we also offer 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 provided our members with an opportunity to purchase through such third party, a specialty form of adaptive digital currency called “ndau”. The sale of ndau was discontinued during the quarter ended September 30, 2023. 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. We currently own and manage over 5,000 next-generation Bitcoin application-specific integrated circuit (“ASIC”) miner machines, with 100% of such machines being powered by renewable energy sources, mainly hydropower plants and geothermal. We are also developing new and more efficient ways to mine cryptocurrencies through innovations in hardware, firmware, and additional ways to develop and utilize renewable energy sources, to increase the hash rate, uptime, profitability, and overall ROI of our crypto currency mining operations.
| 7 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
Since 2021, we have attempted to develop a brokerage and financial markets business. This was originally designed to, among other things, commercialize on the proprietary trading platform we acquired in September 2021 from MPower Trading Systems, LLC (“MPower”), to provide self-directed (DIY) investors with low pricing, a powerful trading platform, research, analytical tools, real-time data & news, insights and support for investing and trading in stocks, options, ETFs and mutual funds. Towards that end, in March 2021, we agreed to acquire a brokerage firm owned by an affiliate of our former chief executive officer. However, having been unable to secure the requisite FINRA approval by the expiration of that agreement, we terminated the transaction on June 14, 2022, and have since then continued our search for alternative acquisitions within the brokerage industry. Further, until we are able to start this business, we recently elected to wind down the registration of a dormant investment advisor and commodity trading advisor we own as we concluded there to be no material benefit to retaining an interest in these regulated businesses until we are able to launch our broader-based financial services model.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
Our policy is to prepare our financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2023, are not necessarily indicative of the operating results that may be expected for the filing of our December 31, 2023 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2022 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly Kuvera, LLC), Apex Tek, LLC (formerly Razor Data, LLC), SAFETek, LLC (formerly WealthGen Global, LLC), United Games, LLC, United League, LLC, iGenius Global LTD (formerly Kuvera (N.I.) LTD), Investview Financial Group Holdings, LLC, Investview MTS, LLC, MyLife Wellness Company, and S.A.F.E Management, LLC. All intercompany transactions and balances have been eliminated in consolidation.
Financial Statement Reclassification
Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| 8 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
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 in April 2022, 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 the accounts of Kuvera France S.A.S. into USD for the following operating periods.
| Nine Months Ended September 30, 2022 | ||||
| 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 September 30, 2023 and December 31, 2022, we had no highly liquid debt instruments.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same such amounts shown in the statement of cash flows.
| September 30, 2023 | December 31, 2022 | |||||||
| 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 and funds required to be held in an account as collateral for business charges on our Company credit card.
Receivables
Receivables
are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of
all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual receivables and
receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. We
had an allowance for doubtful accounts of $
| 9 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
Fixed Assets
Fixed assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net difference less any amount realized from disposition is reflected in earnings. Expenditures for maintenance and repairs which do not extend the useful lives of the related assets are expensed as incurred.
Fixed assets were made up of the following at each balance sheet date:
| Estimated Useful Life (years) | September 30, 2023 | December 31, 2022 | ||||||||||
| Furniture, fixtures, and equipment | $ | $ | ||||||||||
| Computer equipment | ||||||||||||
| Leasehold improvements | ||||||||||||
| Data processing equipment | ||||||||||||
| Mining repair tools and equipment | ||||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||||
| Net book value | $ | $ | ||||||||||
Total
depreciation expense for the nine months ended September 30, 2023 and 2022, was $
Long-Lived Assets – Intangible Assets & License Agreement
We account for our cryptocurrencies and intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30, which requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
We
hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as other assets. The value of our cryptocurrencies
as of September 30, 2023 and December 31, 2022, were $
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. As a
result, we obtained Prodigio, a proprietary software-based trading platform with applications within the brokerage industry, which was
valued at $
| 10 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
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.
During
the nine months ended September 30, 2023,
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on our principal or, in the absence of a principal, most advantageous market for the specific asset or liability.
U.S. generally accepted accounting principles provide for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:
| Level 1: | Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access. | |
| Level 2: | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: |
| - | quoted prices for similar assets or liabilities in active markets; | |
| - | quoted prices for identical or similar assets or liabilities in markets that are not active; | |
| - | inputs other than quoted prices that are observable for the asset or liability; and | |
| - | inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| Level 3: | Inputs that are unobservable and reflect management’s own assumptions about the inputs market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). |
Our financial instruments consist of cash, accounts receivable and accounts payable, and debt. We have determined that the book value of our outstanding financial instruments as of September 30, 2023 and December 31, 2022, approximates the fair value due to their short-term nature or interest rates that approximate prevailing market rates.
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of September 30, 2023:
| 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, 2022:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
| 11 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
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 September 30, 2023 and December 31, 2022, our deferred revenues were
$
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 a third-party supplier. The various packages included different amounts of coin with differing rates of returns and terms. The coin is delivered by a third-party supplier. The sale of cryptocurrency packages was discontinued during the quarter ended September 30, 2023.
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-party to provide coin 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 supplier to deliver the coin, at which time we recognize
revenue and the amounts due to our supplier on our books. As of September 30, 2023 and December 31, 2022, our customer advances related
to cryptocurrency revenue were $ and $
Mining Equipment Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. Our mining equipment repair business was discontinued during the quarter ended June 30, 2023.
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.
| 12 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
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. The sale of digital wallets to our customers was discontinued during the year ended December 31, 2022.
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 nine months ended September 30, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
For
the nine months ended September 30, 2023, foreign and domestic revenues were approximately $
Revenue generated for the nine months ended September 30, 2022, was 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 nine months ended September 30, 2022 foreign and domestic revenues were approximately $
Revenue generated for the three months ended September 30, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | ||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| 13 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
For
the three months ended September 30, 2023, foreign and domestic revenues were approximately $
Revenue generated for the three months ended September 30, 2022, was 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 September 30, 2022 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 nine months ended September 30,
2023 and 2022, totaled $
Cost of Sales and Service
Included
in our costs of sales and services are amounts paid to our trading and market experts that provide financial education content and tools
to our subscription customers, hosting and energy fees that we pay to vendors 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 nine months ended September 30, 2023 and
2022, totaled $
Inventory
Inventory
consists of finished goods to be sold as part of our miner repair revenue and materials that were purchased for refurbishment but will
be sold as purchased due to the Company winding down the refurbishment and sale of repaired miners. 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. During the
nine months ended September 30, 2023, we recognized a loss on disposal of assets of $
Income Taxes
Income taxes are recorded in accordance with ASC Topic 740, Income Taxes, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities, 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.
| 14 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
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 September 30, 2023. Due to the net loss for the three months ended September 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.
| September 30, 2023 | ||||
| Net income (loss) | $ | |||
| Less: preferred dividends | ( | ) | ||
| Add: interest expense on convertible debt | ||||
| Net income available to common shareholders (numerator) | $ | |||
| Basic weighted average number of common shares outstanding | ||||
| Dilutive impact of convertible notes | ||||
| Dilutive impact of non-voting membership interest | ||||
| Diluted weighted average number of common shares outstanding (denominator) | ||||
| Diluted income per common share | $ | |||
The following table illustrates the computation of diluted earnings per share for the nine months ended September 30, 2023 and 2022, where no potentially dilutive securities were excluded from the computation:
| September 30, 2023 | September 30, 2022 | |||||||
| Net income (loss) | $ | $ | ||||||
| Less: preferred dividends | ( | ) | ( | ) | ||||
| Add: interest expense on convertible debt | ||||||||
| Net income available to common shareholders (numerator) | $ | $ | ||||||
| Basic weighted average number of common shares outstanding | ||||||||
| Dilutive impact of convertible notes | ||||||||
| Dilutive impact of non-voting membership interest | ||||||||
| Diluted weighted average number of common shares outstanding (denominator) | ||||||||
| Diluted income per common share | $ | $ | ||||||
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.
| 15 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
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 nine months ended September 30, 2023, we recorded a net income from operations of $
NOTE 5 – RELATED-PARTY TRANSACTIONS
Related Party Debt
Our related-party payables consisted of the following:
| September 30, 2023 | December 31, 2022 | |||||||
| Convertible Promissory Note entered into on 4/27/20, net of debt discount of $ | $ | $ | ||||||
| Convertible Promissory Note entered into on 5/27/20, net of debt discount of $ | ||||||||
| Convertible Promissory Note entered into on 11/9/20, net of debt discount of $ | ||||||||
| Working Capital Promissory Note entered into on 3/22/21 [4] | ||||||||
| Total related-party debt | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Related-party debt, long term | $ | $ | ||||||
| [1] | |
| [2] |
| 16 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
| [3] | |
| [4] |
Other Related Party Arrangements
On
January 6, 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 consultants to the Company. Mr. Romano and Ms. Raynor provided consulting services to the Company in their roles from January 6, 2022,
through the elimination of these positions on or about July 14, 2023. In conjunction with the Separation Agreements, Mr. Romano and Ms.
Raynor forfeited shares, in total, which were returned to the Company and cancelled. The Company also repurchased a total
of shares from Mr. Romano and Ms. Raynor in exchange for cash of $
On
September 29, 2023, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase
and Release Agreement dated September 18, 2023 (the “Agreement”). Under the Agreement, the Company purchased for surrender
in a series of private transactions, an aggregate of shares of the Company’s common stock (the “Purchased Shares”)
from sellers consisting of Mario Romano, Annette Raynor, and a series of their family members and related entities (collectively, the
“Sellers”). The Purchased Shares were purchased for aggregate consideration of $
In
addition to the cash consideration for the Purchased Shares, the Company also agreed to cover a limited amount of the legal fees incurred
by the Sellers in the transaction, as well as provide Mr. Romano and Ms. Raynor with a $
The
consideration paid for the Purchased Shares of $
The
loans referenced in footnotes 1-3 above, were advanced under a Securities Purchase Agreement we entered into on April 27, 2020, with
DBR Capital. Under the Securities Purchase Agreement (which was subsequently amended and restated), DBR Capital agreed to advance up
to $
On August 12, 2022, we and DBR Capital, entered into a Fourth Amendment to the now Amended and Restated Securities Purchase Agreement that extends the deadlines for the fourth and fifth closings under that Agreement from December 31, 2022, to December 31, 2024. The fourth and fifth closings remain at the sole discretion of DBR Capital and we cannot provide any assurance that they will occur when contemplated or ever.
| 17 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
NOTE 6 – DEBT
Our debt consisted of the following:
| September 30, 2023 | December 31, 2022 | |||||||
| 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] |
NOTE 7 – DERIVATIVE LIABILITY
During the nine months ended September 30, 2023, we had the following activity in our derivative liability account relating to our warrants:
| Derivative liability at December 31, 2022 | $ | |||
| Derivative liability recorded on new instruments | ||||
| Derivative liability reduced by warrant exercise (see NOTE 9) | ( | ) | ||
| (Gain) loss on fair value | ( | ) | ||
| Derivative liability at September 30, 2023 | $ |
We use the binomial option pricing model to estimate fair value for those instruments at inception, at warrant exercise, and at each reporting date. During the nine months ended September 30, 2023, the assumptions used in our binomial option pricing model were in the following range:
| Risk free interest rate | % | |||
| Expected life in years | ||||
| Expected volatility | % |
| 18 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
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 assumed an operating lease for office space in Haverford, Pennsylvania (the “Haverford Lease”) in connection with the MPower acquisition. This facility is now being used as the headquarters of the company.
At
commencement of the Eatontown 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 $
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 September 30, 2023, were as follows:
| Remainder of 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| Total | ||||
| Less: Interest | ( | ) | ||
| Present value of lease liability | ||||
| Operating lease liability, current [1] | ( | ) | ||
| Operating lease liability, long term | $ |
| [1] |
NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
We are authorized to issue up to shares of preferred stock with a par value of $ and our board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges, and preferences of that preferred stock.
Our
Board of Directors approved the designation of
| 19 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
During
the year ended March 31, 2021, we commenced a public securities offering to sell a total of units at $ per unit (“Unit
Offering”), with each unit consisting of:
As of September 30, 2023 and December 31, 2022, we had shares of preferred stock issued and outstanding.
Preferred Stock Dividends
During
the nine months ended September 30, 2023, we recorded $
During
the nine months ended September 30, 2022, we recorded $
Common Stock Transactions
During
the nine months ended September 30, 2023, we issued
During
the nine months ended September 30, 2022, we cancelled shares of our common stock that had been issued but were forfeited
voluntarily by the holders thereof, consisting of: shares collectively surrendered by Mario Romano and Annette Raynor under
the Separation Agreements (see NOTE 5); and outstanding unvested restricted shares that were surrendered by senior management
prior to vesting in consideration of the issuance of replacement options (discussed below). As a result, we decreased common stock by
$
As of September 30, 2023 and December 31, 2022, we had and shares of common stock issued and outstanding, respectively.
Options
During
the year ended December 31, 2022, we restructured 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 of our common stock and shares of our common stock that we agreed to issue, subject
to conditions of issuance, in exchange for the issuance of options to purchase shares of our common stock, vesting in equal
amounts over a five-year period, at an exercise price of $
| 20 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
Warrants
Transactions involving our warrants are summarized as follows:
| Weighted | ||||||||
| Number of | Average | |||||||
| Shares | Exercise Price | |||||||
| Warrants outstanding at December 31, 2022 | $ | |||||||
| Granted | $ | |||||||
| Canceled/Expired | $ | |||||||
| Exercised | ( | ) | $ | |||||
| Warrants outstanding at September 30, 2023 | $ | |||||||
Details of our warrants outstanding as of September 30, 2023, 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 September 30, 2023, and December 31, 2022, there were
NOTE 10 – COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, we may be, or have been, involved in legal proceedings. During the nine months ended September 30, 2023, 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 our now discontinued Apex sale and leaseback program, the operation of our direct selling network now known as iGenius, and the offer and sale of cryptocurrency products. 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 have to date and continue 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 a third-party supplier, certain
of which, until January 2022, included a product protection option provided by a third-party provider.
| 21 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2023
(Unaudited)
Joseph Cammarata served as an officer and director of the Company from December 2019 through his termination for cause on or about December 7, 2021. Mr. Cammarata was terminated following the announcement of civil and criminal charges filed against him in connection with his involvement with a class action claims aggregator unrelated to the Company. The Company was unaware of these outside business interests. Based on public reporting of the matter, the Company believes that Mr. Cammarata was convicted of certain of these criminal charges and is presently incarcerated.
Prior to his termination, Mr. Cammarata and the Company engaged in certain transactions as described below:
We
issued a promissory note to Mr. Cammarata, which, following certain modifications, on or about March 30, 2021, was restated in the principal
amount of $
On
March 22, 2021, we entered into Securities Purchase Agreements to purchase
NOTE 11 – INCOME TAXES
For the periods ended September 30, 2023, and September 30, 2022, the Company used a discrete effective tax rate method for recording income taxes, as compared to an estimated full year annual effective tax rate method, as an estimate of the annual effective tax rate cannot be made.
Provision
for income taxes for the three and nine months ended September 30, 2023, was $
NOTE 12 – SUBSEQUENT EVENTS
In accordance with ASC Topic 855, Subsequent Events, we have evaluated subsequent events through the date of this filing and have determined that there are no subsequent events that require disclosure.
| 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 trading research and education, we also offer 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 provided our members with an opportunity to purchase through such third party, a specialty form of adaptive digital currency called “ndau”. The sale of ndau was discontinued during the quarter ended September 30, 2023. 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. We own and manage over 5,000 next-generation Bitcoin application-specific integrated circuit (“ASIC”) miner machines, with 100% of such machines being powered by renewable energy sources, mainly hydropower plants and geothermal. We are also developing new and more efficient ways to mine cryptocurrencies through innovations in hardware, firmware, and additional ways to develop and utilize renewable energy sources, to increase the hash rate, uptime, profitability, and overall ROI of our crypto currency mining operations.
Since 2021, we have attempted to develop a brokerage and financial markets business. This was originally designed to, among other things, commercialize on the proprietary trading platform we acquired in September 2021 from MPower Trading Systems, LLC (“MPower”), to provide self-directed (DIY) investors with low pricing, a powerful trading platform, research, analytical tools, real-time data & news, insights and support for investing and trading in stocks, options, ETFs and mutual funds. Towards that end, in March 2021, we agreed to acquire a brokerage firm owned by an affiliate of our former chief executive officer. However, having been unable to secure the requisite FINRA approval by the expiration of that agreement, we terminated the transaction on June 14, 2022, and have since then continued our search for alternative acquisitions within the brokerage industry. Further, until we are able to start this business, we recently elected to wind down the registration of a dormant investment advisor and commodity trading advisor we own as we concluded there to be no material benefit to retaining an interest in these regulated businesses until we are able to launch our broader-based financial services model.
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Results of Operations
Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022
Revenues
| Three Months Ended September 30, | Increase | |||||||||||
| 2023 | 2022 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 16,117,992 | $ | 11,823,581 | $ | 4,294,411 | ||||||
| Mining revenue | 2,905,182 | 2,777,634 | 127,548 | |||||||||
| Cryptocurrency revenue | 146,466 | 351,433 | (204,967 | ) | ||||||||
| Miner equipment repair revenue | - | 43,511 | (43,511 | ) | ||||||||
| Total revenue, net | $ | 19,169,640 | $ | 14,996,159 | $ | 4,173,481 | ||||||
Revenue, net, increased $4,173,481 or 28%, from $14,996,159 for the three months ended September 30, 2022, to $19,169,640 for the three months ended September 30, 2023. The increase can be explained by $4.3 million and $128 thousand increases in our subscription revenue and mining revenue, offset by a $205 thousand and $44 thousand decrease in our cryptocurrency revenue and miner repair revenue, respectively. The $4.3 million or 36% increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the $128 thousand or 5% increase in mining revenue was primarily the result of a 32% increase in the average value of Bitcoin and further enhanced by the replacement of older less efficient Bitcoin mining equipment with new generation higher performing miners which was partially offset by an 81% increase in Bitcoin mining difficulty and higher power and hosting rates during the same period; and the $205 thousand or (58%) decrease in cryptocurrency revenue was due to an overall decrease in the number of sales of NDAU packages.
Operating Costs and Expenses
| Three Months Ended September 30, | Increase | |||||||||||
| 2023 | 2022 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Cost of sales and service | $ | 3,147,890 | $ | 2,144,733 | $ | 1,003,157 | ||||||
| Commissions | 9,272,024 | 6,551,195 | 2,720,829 | |||||||||
| Selling and marketing | 7,410 | 17,874 | (10,464 | ) | ||||||||
| Salary and related | 1,714,299 | 2,359,225 | (644,926 | ) | ||||||||
| Professional fees | 285,133 | 601,367 | (316,234 | ) | ||||||||
| Impairment expense | - | 625 | (625 | ) | ||||||||
| Loss (gain) on disposal of assets | - | (118,041 | ) | 118,041 | ||||||||
| General and administrative | 2,500,129 | 2,916,167 | (416,038 | ) | ||||||||
| Total operating costs and expenses | $ | 16,926,885 | $ | 14,473,145 | $ | 2,453,740 | ||||||
Operating costs increased $2,453,740, or 17%, from $14,473,145 for the three months ended September 30, 2022, to $16,926,885 for the three months ended September 30, 2023. The increase can be explained by an increase in commissions of $2.7 million, which was a result of increases in our subscription revenue, an increase in cost of sales and services of $1 million, which was a result of an increase in the cost of mining, and an increase in loss (gain) on disposal of assets of $118 thousand, which was a result of a loss recognized during the prior period from the sale of mining equipment from our repair business. These increases were offset by a decrease in salary and related costs of $645 thousand, which was a result of the recognition of more stock-based compensation during the prior period, a decrease in general and administrative, which was a result of a decrease in depreciation expense, and a decrease in professional fees of $316 thousand due to decreased legal expenses.
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Other Income and Expenses
| Three Months Ended September 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Gain (loss) on fair value of derivative liability | 11,939 | 2,319 | 9,620 | |||||||||
| Realized gain (loss) on cryptocurrency | (58,401 | ) | (318,000 | ) | 259,599 | |||||||
| Interest expense | (4,726 | ) | (4,726 | ) | - | |||||||
| Interest expense, related parties | (310,594 | ) | (310,595 | ) | 1 | |||||||
| Other income (expense) | 431,603 | 49,872 | 381,731 | |||||||||
| Total other income (expense) | $ | 69,821 | $ | (581,130 | ) | $ | 650,951 | |||||
We recorded other income of $69,821 for the three months ended September 30, 2023, which was a difference of $650,951, or 112%, from the prior period other expense of $581,130. The change is due to a decrease in the realized loss recorded on cryptocurrency in the current period of $58 thousand compared to a realized loss of $318 thousand in the prior period and an increase in Other income (expense) in the current period of $432 thousand compared to $50 thousand in the prior period, which was a result of earning more interest income due to our cash balances being held in higher interest bearing accounts in the current period compared to the prior period and lease payments received under a structured equipment lease agreement.
Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022
Revenues
| Nine Months Ended September 30, | Increase | |||||||||||
| 2023 | 2022 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 41,659,185 | $ | 36,658,790 | $ | 5,000,395 | ||||||
| Mining revenue | 7,798,279 | 9,412,751 | (1,614,472 | ) | ||||||||
| Cryptocurrency revenue | 513,285 | 1,308,809 | (795,524 | ) | ||||||||
| Miner equipment repair revenue | 23,378 | 123,621 | (100,243 | ) | ||||||||
| Digital wallet revenue | - | 5,868 | (5,868 | ) | ||||||||
| Total revenue, net | $ | 49,994,127 | $ | 47,509,839 | $ | 2,484,288 | ||||||
Revenue, net, increased $2,484,288, or 5%, from $47,509,839 for the nine months ended September 30, 2022, to $49,994,127 for the nine months ended September 30, 2023. The increase can be explained by a $5 million increase in our subscription revenue, offset by a $1.6 million, $796 thousand, and $100 thousand decrease in our mining revenue, cryptocurrency revenue, and miner equipment repair revenue, respectively. The $5 million or 14% increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the $1.6 million or (17%) decrease in mining revenue was a result of a (17%) decrease in the average value of Bitcoin, a 67% increase in the average Bitcoin mining difficulty levels, the migration of mining servers to a new data center and increased power and hosting costs, partially offset by the replacement of older less efficient Bitcoin mining equipment with new generation higher performing miners; the $796 thousand decrease in cryptocurrency revenue was due to an overall decrease in the number of sales of NDAU and the discontinuation of the NDAU program offering; and the $100 thousand or (81%) decrease in miner equipment repair revenue was due to the discontinuance of our miner repair business during the quarter ended June 30, 2023.
Operating Costs and Expenses
| Nine Months Ended September 30, | Increase | |||||||||||
| 2023 | 2022 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Cost of sales and service | $ | 7,614,768 | $ | 5,873,214 | $ | 1,741,554 | ||||||
| Commissions | 24,005,229 | 20,380,676 | 3,624,553 | |||||||||
| Selling and marketing | 536,464 | 53,139 | 483,325 | |||||||||
| Salary and related | 5,416,292 | 5,215,833 | 200,459 | |||||||||
| Professional fees | 1,202,674 | 2,350,687 | (1,148,013 | ) | ||||||||
| Impairment expense | - | 7,008 | (7,008 | ) | ||||||||
| Loss (gain) on disposal of assets | 184,221 | (389,550 | ) | 573,771 | ||||||||
| General and administrative | 7,190,383 | 7,611,867 | (421,484 | ) | ||||||||
| Total operating costs and expenses | $ | 46,150,031 | $ | 41,102,874 | $ | 5,047,157 | ||||||
Operating costs increased $5,047,157, or 12%, from $41,102,874 for the nine months ended September 30, 2022, to $46,150,031 for the nine months ended September 30, 2023. The increase can be explained by an increase in commissions of $3.6 million, which was a result of increases in our subscription revenue, an increase in cost of sales and services of $1.7 million, which was a result of an increase in the cost of mining, an increase in loss (gain) on disposal of assets of $574 thousand, which was a result of a loss recognized during the current period after the discontinuance of our mining equipment repair business, an increase in salary and related costs of $200 thousand, which was a result of the recognition of more stock-based compensation during the current period, and an increase in selling and marketing costs of $483 thousand, which was mainly driven by an iGenius sales and marketing event. These increases were offset by a decrease in professional fees of $1.1 million due to decreased legal expenses.
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Other Income and Expenses
| Nine Months Ended September 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Gain (loss) on debt extinguishment | $ | - | $ | 455 | $ | (455 | ) | |||||
| Gain (loss) on fair value of derivative liability | 15,596 | 40,155 | (24,559 | ) | ||||||||
| Realized gain (loss) on cryptocurrency | 170,444 | (1,338,597 | ) | 1,509,041 | ||||||||
| Interest expense | (14,024 | ) | (14,024 | ) | - | |||||||
| Interest expense, related parties | (929,008 | ) | (2,339,729 | ) | 1,410,721 | |||||||
| Other income (expense) | 1,027,108 | 107,725 | 919,383 | |||||||||
| Total other income (expense) | $ | 270,116 | $ | (3,544,015 | ) | $ | 3,814,131 | |||||
We recorded other income of $270,116 for the nine months ended September 30, 2023, which was a difference of $3,814,131, or 108%, from the prior period other expense of $3,544,015. The change is due to a realized gain recorded on cryptocurrency in the current period of $170 thousand compared to a realized loss of $1.3 million in the prior period, less related party interest expense recorded in current period versus the prior period ($929 thousand for the nine months ended September 30, 2023 compared to $2.3 million for the nine months ended September 30, 2022), and an increase in Other income (expense) in the current period of $1 million compared to $108 thousand in the prior period, which was a result of ticket sales from a promotional event iGenius held during the nine months ended September 30, 2023, earning more interest income due to our cash balances being held in higher interest bearing accounts in the current period compared to the prior period, and lease payments received under a structured equipment lease agreement. 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 nine months ended September 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 nine months ended September 30, 2023, we recorded net income from operations of $3,844,096 and net income of $3,013,613. We used this cash, as well as other cash on hand, to fund operations, fund the purchase of $2,529,237 worth of fixed assets, to repay $675,387 worth of related party debt, and to repay $724,130 worth of debt. As a result, our cash, cash equivalents, and restricted cash increased by $1,413,859 to $22,902,757 as compared to $21,488,898 at the beginning of the fiscal year. As of September 30, 2023, our current assets exceeded our current liabilities to result in working capital of $14,082,655. We believe we will have sufficient resources, including cash flow from operations and access to capital markets, to meet debt service obligations in a timely manner and be able to meet our short-term business objectives.
Critical Accounting Policies
Basis of Accounting
Our policy is to prepare our financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2023, are not necessarily indicative of the operating results that may be expected for the filing of our December 31, 2023 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2022 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K.
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Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly Kuvera, LLC), Apex Tek, LLC (formerly Razor Data, LLC), SAFETek, LLC (formerly WealthGen Global, LLC), United Games, LLC, United League, LLC, iGenius Global LTD (formerly Kuvera (N.I.) LTD), Investview Financial Group Holdings, LLC, Investview MTS, LLC, MyLife Wellness Company, and S.A.F.E Management, LLC. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Long-Lived Assets – Intangible Assets & License Agreement
We account for our cryptocurrencies and intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30, which requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
We hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as other assets. The value of our cryptocurrencies as of September 30, 2023 and December 31, 2022, were $2,183,252 ($2,047,582 current and $135,670 restricted long term) and $2,474,096 ($2,360,957 current and $113,139 restricted long term), respectively. Cryptocurrencies purchased or received for payment from customers are recorded in accordance with ASC 350-30 and cryptocurrencies awarded to the Company through its mining activities ($7,798,279 and $9,412,751 for the nine months ended September 30, 2023 and 2022, respectively) are accounted for in connection with the Company’s revenue recognition policy. The use of cryptocurrencies is accounted for in accordance with the first in first out method of accounting. For the nine months ended September 30, 2023 and 2022, we recorded realized gains (losses) on our cryptocurrency transactions of $170,444 and $(1,338,597), respectively.
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. As a result, we obtained Prodigio, a proprietary software-based trading platform with applications within the brokerage industry, which was valued at $7,240,000 and recorded on our balance sheet as an intangible asset as of December 31, 2021. The intangible asset was expected to have a definite life, however, during the year ended December 31, 2022, the software had not been placed in service, therefore a useful life had not been assigned and no amortization had been recorded. Instead, as of December 31, 2022, the intangible asset was conservatively impaired due to a question on the recoverability of the value recorded.
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.
During the nine months ended September 30, 2023, no impairment was recorded. During the nine months ended September 30, 2022, we impaired our fixed assets with a cost basis of $15,772 due to the lack of use. We had recorded accumulated depreciation and accumulated amortization of $8,764 for the impaired assets through the date of impairment, therefore we recorded impairment expense of $7,008 during the nine months ended September 30, 2022.
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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 September 30, 2023 and December 31, 2022, our deferred revenues were $2,803,982 and $2,074,574, 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 a third-party supplier. The various packages included different amounts of coin with differing rates of returns and terms. The coin is delivered by a third-party supplier. The sale of cryptocurrency packages was discontinued during the quarter ended September 30, 2023.
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-party to provide 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 supplier to deliver coin, at which time we recognize revenue and the amounts due to our supplier on our books. As of September 30, 2023 and December 31, 2022, our customer advances related to cryptocurrency revenue were $0 and $96,609, respectively.
Mining Equipment Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. Our mining equipment repair business was discontinued during the quarter ended June 30, 2023.
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. The sale of digital wallets to our customers was discontinued during the year ended December 31, 2022.
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.
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Revenue generated for the nine months ended September 30, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 45,284,739 | $ | 990,785 | $ | 7,798,279 | $ | 23,378 | $ | 54,097,181 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (3,625,554 | ) | - | - | - | (3,625,554 | ) | |||||||||||||
| Amounts paid to providers | - | (477,500 | ) | - | - | (477,500 | ) | |||||||||||||
| Net revenue | $ | 41,659,185 | $ | 513,285 | $ | 7,798,279 | $ | 23,378 | $ | 49,994,127 | ||||||||||
For the nine months ended September 30, 2023, foreign and domestic revenues were approximately $38.1 million and $11.9 million, respectively.
Revenue generated for the nine months ended September 30, 2022, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Digital Wallet Revenue | Total | |||||||||||||||||||
| Gross billings/receipts | $ | 39,087,141 | $ | 2,548,316 | $ | 9,412,751 | $ | 123,621 | $ | 7,157 | $ | 51,178,986 | ||||||||||||
| Refunds, incentives, credits, and chargebacks | (2,428,351 | ) | - | - | - | - | (2,428,351 | ) | ||||||||||||||||
| Amounts paid to providers | - | (1,239,507 | ) | - | - | (1,289 | ) | (1,240,796 | ) | |||||||||||||||
| Net revenue | $ | 36,658,790 | $ | 1,308,809 | $ | 9,412,751 | $ | 123,621 | $ | 5,868 | $ | 47,509,839 | ||||||||||||
For the nine months ended September 30, 2022 foreign and domestic revenues were approximately $32.2 million and $15.3 million, respectively.
Revenue generated for the three months ended September 30, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 17,499,805 | $ | 258,466 | $ | 2,905,182 | $ | 20,663,453 | ||||||||
| Refunds, incentives, credits, and chargebacks | (1,381,813 | ) | - | - | (1,381,813 | ) | ||||||||||
| Amounts paid to providers | - | (112,000 | ) | - | (112,000 | ) | ||||||||||
| Net revenue | $ | 16,117,992 | $ | 146,466 | $ | 2,905,182 | $ | 19,169,640 | ||||||||
For the three months ended September 30, 2023, foreign and domestic revenues were approximately $14.7 million and $4.5 million, respectively.
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Revenue generated for the three months ended September 30, 2022, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Digital Wallet Revenue | Total | |||||||||||||||||||
| Gross billings/receipts | $ | 12,638,375 | $ | 673,933 | $ | 2,777,634 | $ | 43,511 | $ | - | $ | 16,133,454 | ||||||||||||
| Refunds, incentives, credits, and chargebacks | (814,794 | ) | - | - | - | - | (814,794 | ) | ||||||||||||||||
| Amounts paid to providers | - | (322,500 | ) | - | - | - | (322,500 | ) | ||||||||||||||||
| Net revenue | $ | 11,823,581 | $ | 351,433 | $ | 2,777,634 | $ | 43,511 | $ | - | $ | 14,996,159 | ||||||||||||
For the three months ended September 30, 2022 foreign and domestic revenues were approximately $10.3 million and $4.7 million, respectively.
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.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity, or capital expenditures.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.
ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective.
Changes in Internal Controls
There were no changes in our internal controls over financial reporting during the fiscal quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
There have been no material changes to this information since reported on in the Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 1.A – RISK FACTORS
Other than as set forth below, there have been no material changes in the risk factors disclosed by us under Part I, Item 1A. Risk Factors contained in the Annual Report on Form 10-K for the year ended December 31, 2022.
The costs associated with our bitcoin mining operations could be subject to significant increase in the future should there occur an increase in the VAT tax imposed on our hosting services.
The Company’s bitcoin mining operations are hosted in a Northern European country that imposes a broadly-based consumption tax assessed on the value added to goods and services within its country (a “VAT tax”). However, upon the advice of local tax advisors, the Company has concluded that the imposition of a VAT tax upon in-country hosting services is subject to uncertainty. Rather than paying no VAT tax pending clarification of this uncertainty, and upon the advice of local tax advisors, the Company has implemented a structured leasing arrangement with its hosting counterparty in which lease payments to be received will be subject to a VAT tax upon which the Company will remit payment. While the Company believes that by adopting this type of structured arrangement, it can avoid any penalties or fines in the future should the local tax laws be modified or interpreted to apply to the local hosting services, there can be no assurances to this effect as the tax laws and interpretations thereof are subject to change, particularly in response to the tremendous growth in the high-powered computing industry. Further, there can be no assurances that if and to the extent that local tax laws are interpreted in the future to apply to hosting services, that the amount of VAT tax imposed upon the Company may not substantially exceed the amount payable under the currently contemplated structured leasing arrangement. A substantial increase in the amount of VAT tax due upon these local hosting operations, if it occurs, would increase the costs associated with the Company’s bitcoin operations, which could have a materially adverse effect on the Company’s business and operating results.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On September 29, 2023, Investview, Inc. (the “Company”) closed on the purchase in a private transaction of shares of its common stock under the terms of a Stock Purchase and Release Agreement dated September 18, 2023 (the “Agreement”). Under the Agreement, the Company purchased for surrender in a series of private transactions, an aggregate of 302,919,223 shares of the Company’s common stock (the “Purchased Shares”) from sellers consisting of Mario Romano, Annette Raynor, and a series of their family members and related entities (collectively, the “Sellers”). The Purchased Shares were purchased for aggregate consideration of $2,922,380, representing a price of $0.00964739 per share. One-eighth of the purchase price is to be paid within seven (7) days of the closing, with the balance payable in a series of equal quarterly payments over seven (7) consecutive quarters thereafter.
In addition to the cash consideration for the Purchased Shares, the Company also agreed to cover a limited amount of the legal fees incurred by the Sellers in the transaction, as well as provide Mr. Romano and Ms. Raynor with a $250,000 expense allowance, payable in installments, to cover legal fees and other expenses on a non-accountable basis, in connection with any matters that may arise in which either or both of Mr. Romano and/or Ms. Raynor served as officers and directors of the Company. In return, Mr. Romano and Ms. Raynor agreed to waive any future entitlement, if at all, to indemnification of costs and expenses, including legal fees under Nevada law or otherwise arising from or relating to any period in which Romano or Raynor were officers and directors of the Company.
Under the Agreement, the Sellers represented to the Company that the Purchased Shares represent one hundred percent (100%) of the common equity ownership in the Company of Mr. Romano, Ms. Raynor, and their respective family members and related entities. The Purchased Shares represent approximately 11.49% of the Company’s outstanding shares. As adjusted to reflect the surrender, the Company’s outstanding shares have been reduced from 2,636,275,719 to 2,333,356,496 shares of common stock.
Mr. Romano and Ms. Raynor were two of the original founders of the Company. They served as officers and directors of the Company through their resignations from those positions in January 2022. From January 2022 through August 2023, Mr. Romano and Ms. Raynor served as consultants to the Company. The Purchased Shares had been the subject of a lock-up agreement which limited resales until April 2025, the terms of which were waived to allow the transaction with the Company under the Agreement.
In addition to customary purchase and sale terms, under the Agreement, the Sellers, including Mr. Romano and Ms. Raynor, agreed to provide a customary release to the Company and its affiliates; as well, they agreed to certain customary standstill, non-disparagement, non-competition, and non-solicitation covenants.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 – OTHER INFORMATION
None.
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ITEM 6 – EXHIBITS
The following exhibits are filed as a part of this report:
| Exhibit Number* |
Title of Document | Location | ||
| Item 10 | Material Contracts | |||
| 10.124 | Stock Purchase and Release Agreement dated September 18, 2023 | Incorporated by reference to the Current Report on Form 8-K filed on October 4, 2023 | ||
| Item 31 | Rule 13a-14(a)/15d-14(a) Certifications | |||
| 31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | This filing. | ||
| 31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | This filing. | ||
| Item 32 | Section 1350 Certifications | |||
| 32.01 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
| 32.02 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
| Item 101*** | Interactive Data File | |||
| 101.INS | Inline XBRL Instance Document | This filing. | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | This filing. | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | This filing. | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | This filing. | ||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | This filing. | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | This filing. | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | This filing. |
| * | All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document. Omitted numbers in the sequence refer to documents previously filed as an exhibit. |
| *** | Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability. |
| 32 |
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INVESTVIEW, INC. | ||
| Dated: November 13, 2023 | By: | /s/ Victor M. Oviedo |
| Victor M. Oviedo | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: November 13, 2023 | By: | /s/ Ralph R. Valvano |
| Ralph R. Valvano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Accounting Officer) | ||
| 33 |