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 | ☐ | No |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 14, 2024, there were shares of common stock, $0.001 par value, outstanding.
INVESTVIEW, INC.
Form 10-Q for the Three Months Ended March 31, 2024
Table of Contents
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
INVESTVIEW, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2024 | December 31, 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Prepaid assets | ||||||||
| Receivables | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Other assets: | ||||||||
| Operating lease right-of-use asset | ||||||||
| Deposits | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Payroll liabilities | ||||||||
| Income tax payable | ||||||||
| Deferred revenue | ||||||||
| Derivative liability | ||||||||
| Dividend liability | ||||||||
| Operating lease liability, current | ||||||||
| Related party debt, net of discounts, current | ||||||||
| Debt, net of discounts, current | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, long term | ||||||||
| Accrued liabilities, long term | ||||||||
| Related party debt, net of discounts, long term | ||||||||
| Debt, net of discounts, long term | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, par value: $; shares authorized, and issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Common stock, par value $; shares authorized; and shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
INVESTVIEW, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue: | ||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | $ | ||||||
| Mining revenue | ||||||||
| Cryptocurrency revenue | ||||||||
| Mining equipment repair revenue | ||||||||
| Total revenue, net | ||||||||
| Operating costs and expenses: | ||||||||
| Cost of sales and service | ||||||||
| Commissions | ||||||||
| Selling and marketing | ||||||||
| Salary and related | ||||||||
| Professional fees | ||||||||
| Loss (gain) on disposal of assets | ||||||||
| General and administrative | ||||||||
| Total operating costs and expenses | ||||||||
| Net income (loss) from operations | ||||||||
| Other income (expense): | ||||||||
| Gain (loss) on fair value of derivative liability | ||||||||
| Realized gain (loss) on cryptocurrency | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest expense, related parties | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Total other income (expense) | ||||||||
| Income (loss) before income taxes | ||||||||
| Income tax expense | ( | ) | ( | ) | ||||
| Net income (loss) | ||||||||
| Dividends on Preferred Stock | ( | ) | ( | ) | ||||
| Net income (loss) applicable to common shareholders | $ | $ | ||||||
| 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 MONTHS ENDED MARCH 31, 2024 AND 2023
(Unaudited)
| Additional | Accumulated Other | |||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Paid in | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Warrant Exercise | - | |||||||||||||||||||||||||||||||
| Derivative liability extinguished with warrant exercise | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock repurchased from former related parties and canceled | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
INVESTVIEW, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | $ | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of debt discount | ||||||||
| Stock issued for services and other stock-based compensation | ||||||||
| Lease cost, net of repayment | ||||||||
| (Gain) loss on disposal of fixed assets | ||||||||
| (Gain) loss on fair value of derivative liability | ( | ) | ( | ) | ||||
| Realized (gain) loss on cryptocurrency | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | ( | ) | ( | ) | ||||
| Inventory | ||||||||
| Prepaid assets | ( | ) | ( | ) | ||||
| Income tax paid in advance | ||||||||
| Deposits | ( | ) | ( | ) | ||||
| Other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Income tax payable | ||||||||
| Customer advance | ( | ) | ||||||
| Deferred revenue | ||||||||
| Accrued interest | ||||||||
| Accrued interest, related parties | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid for fixed assets | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayments for related party debt | ( | ) | ( | ) | ||||
| Repayments for debt | ( | ) | ( | ) | ||||
| Payments for shares repurchased from former related parties | ( | ) | ||||||
| Dividends paid | ( | ) | ( | ) | ||||
| Proceeds from the exercise of warrants | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||
| 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 repurchased for payables | $ | $ | ||||||
| Derivative liability extinguished with warrant exercise | $ | $ | ||||||
| Dividends declared | $ | $ | ||||||
| Dividends paid with cryptocurrency | $ | $ | ||||||
| Debt extinguished in exchange for cryptocurrency | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Organization
Investview,
Inc. was incorporated on
Effective April 1, 2017, we closed on a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company (“Wealth Generators”), pursuant to which the Wealth Generators members contributed % 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 diversified financial technology company that through its subsidiaries and global distribution network provides financial technology, education tools, content, research, and a digital asset technology company, which develops, operates, and supports blockchain technologies, with a focus on the Bitcoin blockchain ecosystem and the generation of digital assets. In addition, we are expanding our business into the retail brokerage and financial markets industry by integrating the online brokerage trading platform we acquired in connection with our recent acquisition of Opencash Securities, LLC (“Opencash”), with the proprietary algorithmic trading platform we acquired in September 2021. Opencash is an early-stage registered broker-dealer that plans to offer investors an online trading platform to enable self-directed retail brokerage services and develop synergies with the educational content and products offered by one of our other business units.
| 7 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
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 months ended March 31, 2024, are not necessarily indicative of the operating results that may be expected for our year ending December 31, 2024, as will be included in the filing of our Annual Report on Form 10-K for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2023 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC, SAFETek, LLC, Investview Financial Group Holdings, LLC, Opencash Finance, Inc., Opencash Securities, LLC, Investview MTS, LLC, and MyLife Wellness Company. All intercompany transactions and balances have been eliminated in consolidation.
Financial Statement Reclassification
Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
Financial
instruments that potentially expose us to concentration of credit risk include cash, 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 March 31, 2024 and December 31, 2023, we had no highly liquid debt instruments.
| 8 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
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.
| March 31, 2024 | December 31, 2023 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Total cash, cash equivalents, and restricted cash shown on the statement of cash flows | $ | $ | ||||||
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 $
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) | March 31, 2024 | December 31, 2023 | ||||||||
| Furniture, fixtures, and equipment | $ | $ | ||||||||
| Computer equipment | ||||||||||
| Data processing equipment | ||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||
| Net book value | $ | $ | ||||||||
Total
depreciation expense for the three months ended March 31, 2024 and 2023, 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 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.
| 9 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
We
hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as other assets. The value of our cryptocurrencies
as of March, 31 2024 and December 31, 2023 were $
Impairment of Long-Lived Assets
We have adopted ASC Subtopic 360-10, Property, Plant and Equipment. ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by us be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value of an asset may no longer be appropriate. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.
We
evaluate the recoverability of long-lived assets based upon future net cash flows expected to result from the asset, including eventual
disposition. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted and an impairment loss
is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. During the three months
ended March 31, 2024 and March 31, 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). | ||
| 10 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
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 March 31, 2024 and December 31, 2023, approximates the fair value due to their short-term nature or interest rates that approximate prevailing market rates.
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of March 31, 2024:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December 31, 2023:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
Revenue Recognition
Subscription Revenue
Most
of our revenue is generated by membership and subscription sales and payment is received at the time of purchase. We recognize subscription
revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and
recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over
a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for
the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first-time
subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues
are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds,
sales incentives, credits, and known and estimated credit card chargebacks. As of March 31, 2024 and December 31, 2023, our deferred
revenues were $
Mining Revenue
We generate revenue from mining bitcoin. The Company has entered into a digital asset mining pool by executing a contract, as amended from time to time, with the mining pool operator to provide computing power to the mining pool. The contract is terminable at any time by either party without penalty and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, we are entitled to a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator.
| 11 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contract with the mining pool operator. The transaction consideration the Company receives is net of digital asset transaction fees kept by the mining pool operator and is noncash, in the form of Bitcoin, which the Company measures at fair value on the date Bitcoin is received. This value is not materially different than the fair value at the moment we meet the performance obligation, which can be recalculated based on the contractual formula. The consideration is variable. The amount of consideration recognized is constrained to the amount of consideration received, which is when it is probable a significant reversal will not occur. There is no significant financing component or risk of a significant revenue reversal in these transactions due to the performance obligations and settlement of the transactions being on a daily basis.
Cryptocurrency Revenue
During 2023, we generated revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party supplier. The various packages included different amounts of coin with differing rates of returns and terms. The coin is delivered by a third-party supplier. The sale of cryptocurrency packages was discontinued during the year ended December 31, 2023.
During 2023, we recognized cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation was to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment was received from our customers at the time of order placement. All customers were given two weeks to request a refund, therefore we would record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party supplier to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our supplier on our books. During the quarter ended March 31, 2024, we generated no revenue from the sale of cryptocurrency packages.
Mining Equipment Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, prior to June 30, 2023, we repaired broken mining equipment for sale to third-party customers. Our mining equipment repair business was discontinued during the quarter ended June 30, 2023.
Prior to June 30, 2023, we 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.
Revenue generated for the three months ended March, 31 2024, was as follows:
| Subscription Revenue | Mining Revenue | Total | ||||||||||
| Gross billings/receipts | $ | $ | $ | |||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||
| Net revenue | $ | $ | $ | |||||||||
For
the three months ended March 31, 2024, foreign and domestic revenues were approximately $
| 12 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
Revenue generated for the three months ended March 31, 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 three months ended March 31, 2023 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 three months ended March 31, 2024
and 2023, totaled $
Cost of Sales and Service
Included
in our costs of sales and services are amounts paid to our trading and market experts that provide financial education content and tools
to our subscription customers and hosting and electricity fees that we pay to a third-party
vendor in order to generate mining revenue. Costs of sales and services for the three months ended March, 31 2024 and 2023, totaled $
Inventory
Inventory
is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method and is inclusive of any shipping and
tax costs. Due to the discontinuance of our miner repair business during the quarter ended June 30, 2023, all inventory was sold as purchased.
During the three months ended March 31, 2023 we sold $
Income Taxes
We have adopted ASC Subtopic 740-10, Income Taxes, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against our deferred tax assets. Deferred tax assets are reduced by a valuation allowance if, based on the consideration of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Changes in assumptions in future periods may require us to adjust our valuation allowance, which could materially impact our financial position and results of operations. The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return, if such a position is more likely than not to be sustained.
We follow ASC Subtopic 260-10, Earnings per Share, which specifies the computation, presentation, and disclosure requirements of earnings per share information. Basic loss per share has been calculated based upon the weighted average number of common shares outstanding. Diluted income (loss) per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.
| 13 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
| March 31, 2024 | March 31, 2023 | |||||||
| Net income | $ | |||||||
| Less: preferred dividends | ( | ) | ( | ) | ||||
| Add: interest expense on convertible debt | ||||||||
| Net income available to common shareholders (numerator) | $ | |||||||
| Basic weighted average number of common shares outstanding | ||||||||
| Dilutive impact of convertible notes | ||||||||
| Dilutive impact of non-voting membership interest | ||||||||
| Diluted weighted average number of common shares outstanding (denominator) | ||||||||
| Diluted income per common share | $ | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
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.
| 14 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company has not yet adopted ASU No. 2023-08 and is currently evaluating the impact that the adoption will have on the Company’s financial statement presentation and disclosures.
We have noted no other recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements.
NOTE 4 – LIQUIDITY
Our financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
During
the three months ended March 31, 2024, we recorded a net income from operations of $
NOTE 5 – RELATED-PARTY TRANSACTIONS
Related Party Debt
Our related-party payables consisted of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| Convertible Promissory Note entered into on 4/27/20, net of debt discount of $ | $ | $ | ||||||
| Convertible Promissory Note entered into on 5/27/20, net of debt discount of $ | ||||||||
| Convertible Promissory Note entered into on 11/9/20, net of debt discount of $ | ||||||||
| Working Capital Promissory Note entered into on 3/22/21 [4] | ||||||||
| Total related-party debt | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Related-party debt, long term | $ | $ | ||||||
| [1] |
| 15 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
| [2] | |
| [3] | |
| [4] |
The
loans referenced in footnotes 1-3 above, were advanced under a Securities Purchase Agreement we entered into on April 27, 2020, with
DBR Capital. Under the Securities Purchase Agreement (which was subsequently amended and restated), DBR Capital agreed to advance up
to $
On August 12, 2022, we and DBR Capital, entered into a Fourth Amendment to the now Amended and Restated Securities Purchase Agreement that extends the deadlines for the fourth and fifth closings under that Agreement from December 31, 2022, to December 31, 2024. The fourth and fifth closings remain at the sole discretion of DBR Capital, and we cannot provide any assurance that they will occur when contemplated or ever.
Other Related Party Arrangements
On
September 29, 2023, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase
and Release Agreement dated September 18, 2023 (the “Romano/Raynor Agreement”). Under the Romano/Raynor Agreement, the Company
purchased for surrender in a series of private transactions, an aggregate of shares of the Company’s common stock (the
“Romano/Raynor Purchased Shares”) from sellers consisting of Mario Romano, Annette Raynor, and a series of their family members
and related entities (collectively, the “Sellers”). The Romano/Raynor Purchased Shares were purchased for aggregate consideration
of $
In
addition to the cash consideration for the Purchased Shares, the Company also agreed to cover a limited amount of the legal fees incurred
by the Sellers in the transaction, as well as provide Mr. Romano and Ms. Raynor with a $
| 16 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
The
consideration paid for the Purchased Shares of $
On
February 7, 2024, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase
and Release Agreement dated February 6, 2024 (the “Smith/Miller Agreement”). Under the Smith/Miller Agreement, the Company
purchased for surrender and cancellation a total of shares of the Company’s common stock (the “Smith/Miller Purchased
Shares”) from Ryan Smith and Chad Miller and certain of their respective affiliates and family members. The Smith/Miller Purchased
Shares were purchased for aggregate purchase price of $
The
consideration paid for the Purchased Shares of $
NOTE 6 – DEBT
Our debt consisted of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| Loan with the U.S. Small Business Administration dated 4/19/20 [1] | $ | $ | ||||||
| Long term notes for APEX lease buyback [2] | ||||||||
| Total debt | ||||||||
| Less: Current portion | ||||||||
| Debt, long term portion | $ | $ | ||||||
| [1] | |
| [2] |
| 17 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
NOTE 7 – DERIVATIVE LIABILITY
During the three months ended March 31, 2024, we had the following activity in our derivative liability account relating to our warrants:
| Derivative liability at December 31, 2023 | $ | |||
| Derivative liability recorded on new instruments | ||||
| Derivative liability reduced by warrant exercise | ||||
| (Gain) loss on fair value | ( | ) | ||
| Derivative liability at March 31, 2024 | $ |
We use the binomial option pricing model to estimate fair value for those instruments at inception, at warrant exercise, and at each reporting date. During the three months ended March 31, 2024, the assumptions used in our binomial option pricing model were in the following range:
| Risk free interest rate | % | |||
| Expected life in years | ||||
| Expected volatility | % |
NOTE 8 – OPERATING LEASE
In July 2021 we entered an operating lease for office space in Wyckoff, New Jersey (the “Wyckoff Lease”), and in September 2021 we assumed an operating lease for office space in Haverford, Pennsylvania (the “Haverford Lease”) in connection with the MPower acquisition. This facility will now be used as the headquarters of the company.
At
commencement of the Wyckoff Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
date of acquisition of the Haverford Lease, right-of-use assets and lease liabilities obtained amounted to $
Operating
lease expense was $
Future minimum lease payments under non-cancellable leases as of March 31, 2024, were as follows:
| Remainder of 2024 | $ | |||
| 2025 | ||||
| Total | ||||
| Less: Interest | ( | ) | ||
| Present value of lease liability | ||||
| Operating lease liability, current [1] | ( | ) | ||
| Operating lease liability, long term | $ |
| [1] |
| 18 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
We are authorized to issue up to shares of preferred stock with a par value of $ and our board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges, and preferences of that preferred stock.
Our
Board of Directors approved the designation of
During
the year ended March 31, 2021, we commenced a security offering to sell a total of units at $ per unit (“Unit Offering”),
such that each unit consisted of:
As of March 31, 2024 and December 31, 2023, we had shares of preferred stock issued and outstanding.
Preferred Stock Dividends
During
the three months ended March 31, 2024, we recorded $
During
the three months ended March 31, 2023, we recorded $
Common Stock Transactions
During
the three months ended March 31, 2024, we repurchased shares from two of the original founders of the Company and a series
of their family members and related entities in exchange for cash of $
During
the three months ended March 31, 2023, we issued
As of March 31, 2024 and December 31, 2023, we had and shares of common stock issued and outstanding, respectively.
Options
The 2022 Incentive Plan authorizes a variety of incentive awards consisting of stock options, restricted stock, restricted stock units, and reserves for issuance up to shares of the Company’s common stock.
During
the period ended March 31, 2024, we issued stock options as part of the acquisition of Opencash Finance, Inc. The options vest
in equal amounts over a five-year period, at an exercise price of $
| 19 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
| Weighted | Weighted Average Grant-Date | |||||||||||
| Number of | Average | Per Share | ||||||||||
| Options | Exercise Price | Fair Value | ||||||||||
| Options outstanding at December 31, 2023 | $ | $ | ||||||||||
| Granted | $ | $ | ||||||||||
| Canceled/Expired | $ | $ | - | |||||||||
| Exercised | $ | $ | - | |||||||||
| Options outstanding at March 31, 2024 | $ | $ | ||||||||||
Details of our options outstanding as of March 31, 2023, is as follows:
| Options Exercisable | Weighted Average Exercise Price of Options Exercisable | Weighted Average Contractual Life of Options Exercisable (Years) | Weighted Average Contractual Life of Options Outstanding (Years) | |||||||||||
Total
stock compensation expense related to the options for the three months ended March 31, 2024 and 2023, was $
Warrants
Transactions involving our warrants are summarized as follows:
| Number of | Weighted Average | |||||||
| Warrants | Exercise Price | |||||||
| Warrants outstanding at December 31, 2023 | $ | |||||||
| Granted | $ | |||||||
| Canceled/Expired | $ | |||||||
| Exercised | $ | |||||||
| Warrants outstanding at March 31, 2024 | $ | |||||||
Details of our warrants outstanding as of March 31, 2023, is as follows:
| Warrants Exercisable | Weighted Average Contractual Life of Warrants Outstanding and Exercisable (Years) | |||||
| 20 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
Class B Units of Investview Financial Group Holdings, LLC
As
of March 31, 2024, and December 31, 2023, there were
NOTE 10 – COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, we may be, or have been, involved in legal proceedings. During November 2021, we received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. In the subpoena, the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities laws and or any other law. Following our own internal review, we believe that we have complied at all times with the federal securities laws, and through the end of our first quarter in 2024, we have received no follow-up communications from the SEC following our production of documents in 2022. We have cooperated fully with the SEC’s investigation and will continue to work with outside counsel to respond to any further inquiries of the SEC, if, and to the extent they arise.
Through
August 2023, we generated revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party
supplier, certain of which, until January 2022, included a product protection option provided by a third-party provider.
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.
| 21 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024
(Unaudited)
Prior to his termination, Mr. Cammarata and the Company engaged in certain transactions as described below:
We
issued a promissory note to Mr. Cammarata, which, following certain modifications, on or about March 30, 2021, was restated in the principal
amount of $
On
March 22, 2021, we entered into Securities Purchase Agreements to purchase
NOTE 11 – INCOME TAXES
For the periods ended March 31, 2024, and March 31, 2023, the Company used a discrete effective tax rate method for recording income taxes, as compared to an estimated full year annual effective tax rate method, as an estimate of the annual effective tax rate cannot be made.
Provision
for income taxes for the three months ended March 31, 2024, was $
NOTE 12 – REGULATORY REQUIREMENTS
NOTE 13 – SUBSEQUENT EVENTS
In accordance with ASC Topic 855, Subsequent Events, we have evaluated subsequent events through the date of this filing and have determined that there are no subsequent events that require disclosure.
| 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 within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, as noted by use of the words “believe,” “expect,” “plan,” “project,” “estimate,” and any variations thereof that are intended to identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management, and involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found elsewhere in this Report and in our periodic reports filed with the U.S. Securities and Exchange Commission. The forward-looking statements included are made only as of the date of this report. Except as required by law, we have no obligation and do not undertake to update or revise any such forward-looking statements to reflect events or circumstances after the date of the report.
Business Overview
We operate a diversified financial technology company that through our subsidiaries and global distribution network provides financial technology, education tools, content, research, and a digital asset technology business, which develops, operates, and supports blockchain technologies, with a focus on the Bitcoin blockchain ecosystem and the generation of digital assets. In addition, we are planning to expand our business into the retail brokerage and financial markets industry by integrating the online brokerage trading platform we acquired in connection with our recent acquisition of Opencash Securities, LLC (“Opencash”), with the proprietary algorithmic trading platform we acquired in September 2021. Opencash is an early-stage registered broker-dealer that plans to offer investors an online trading platform to enable self-directed retail brokerage services and develop synergies with the educational content and products offered by other of our business units.
Results of Operations
Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023
Revenues
| Three Months Ended March 31, | Increase | |||||||||||
| 2024 | 2023 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 13,029,318 | $ | 11,192,111 | $ | 1,837,207 | ||||||
| Mining revenue | 2,642,599 | 2,070,819 | 571,780 | |||||||||
| Cryptocurrency revenue | - | 280,300 | (280,300 | ) | ||||||||
| Miner repair revenue | - | 23,378 | (23,378 | ) | ||||||||
| Total revenue, net | $ | 15,671,917 | $ | 13,566,608 | $ | 2,105,309 | ||||||
Revenue, net, increased $2,105,309 or 16%, from $13,566,608 for the three months ended March 31, 2023, to $15,671,917 for the three months ended March 31, 2024. The increase can be explained by $1.8 million and $572 thousand increases in our subscription revenue and mining revenue, respectively, offset by a $280 thousand and $23 thousand decrease in our cryptocurrency revenue and miner repair revenue, respectively. The $1.8 million (16%) increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the $572 thousand (28%) increase in mining revenue was a result of the increase in the value of Bitcoin, partially offset by a 105% increase in the average Bitcoin mining difficulty level and a utility/government mandated partial energy curtailment that began in early January 2024 and resulted in mining less coin; the $280 thousand (100%) decrease in cryptocurrency revenue was due to the discontinuation of our distribution of NDAU during the year ended December 31, 2023; and the $23 thousand or (100%) decrease in miner equipment repair revenue was due to the discontinuance of our miner repair business during the quarter ended June 30, 2023.
| 23 |
Operating Costs
| Three Months Ended March 31, | Increase | |||||||||||
| 2024 | 2023 | (Decrease) | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Cost of sales and service | $ | 2,142,334 | $ | 1,877,928 | $ | 264,406 | ||||||
| Commissions | 7,275,210 | 6,529,093 | 746,117 | |||||||||
| Selling and marketing | 11,795 | 252,434 | (240,639 | ) | ||||||||
| Salary and related | 1,628,970 | 1,924,197 | (295,227 | ) | ||||||||
| Professional fees | 406,529 | 493,884 | (87,355 | ) | ||||||||
| Loss (gain) on disposal of assets | - | 20,270 | ) | (20,270 | ) | |||||||
| General and administrative | 2,336,655 | 2,076,430 | 260,225 | |||||||||
| Total operating costs and expenses | $ | 13,801,493 | $ | 13,174,236 | $ | 627,257 | ||||||
Operating costs increased $627,257, or 5%, from $13,174,236 for the three months ended March 31, 2023, to $13,801,493 for the three months ended March 31, 2024. The increase can be explained by an increase in cost of sales and service of $264 thousand, which was a result of an increase in mining costs, an increase in commissions of $746 thousand, which was a result of an increase in our subscription revenue, an increase in general and administrative expense of $260 thousand, which was a result of an increase in depreciation expense, offset by a decrease in professional fees of $87 thousand due to decreased consultant fees, decrease in salary and related costs of $295 thousand due to the recognition of more stock-based compensation during the prior period, and a decrease in selling and marketing costs of $241 thousand, which was mainly driven by an iGenius sales and marketing event in the first quarter of 2023.
Other Income and Expenses
| Three Months Ended March 31, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Gain (loss) on fair value of derivative liability | $ | 74 | $ | 8,756 | $ | (8,682 | ) | |||||
| Realized gain (loss) on cryptocurrency | 276,227 | 242,572 | 33,655 | |||||||||
| Interest expense | (4,675 | ) | (4,623 | ) | (52 | ) | ||||||
| Interest expense, related parties | (309,670 | ) | (308,744 | ) | (926 | ) | ||||||
| Other income (expense) | 337,635 | 172,623 | 165,012 | |||||||||
| Total other income (expense) | $ | 299,591 | $ | 110,584 | $ | 189,007 | ||||||
We recorded other income of $299,591 for the three months ended March 31, 2024, which was an increase of $189,007, or 171%, from the prior period other expense of $110,584. The change is due to a realized gain recorded on cryptocurrency in the current period of $276 thousand compared to a realized gain of $243 thousand in the prior period and an increase in Other income (expense) in the current period of $165 thousand, as we realized more interest income in the current period due to our cash balances being held in higher interest-bearing accounts, as compared to the prior period, and we realized certain structured equipment lease payments in the current period that did not exist in the comparable prior year period.
Liquidity and Capital Resources
During the three months ended March 31, 2024, we met our short-and long-term working capital and capital expenditure requirements, including funding for operations, capital expenditures, growth initiatives, and for debt service on our outstanding indebtedness and dividends on our Series B Preferred Stock, through net cash flows provided by operating activities. We believe we will have sufficient resources, including cash flow from operations and access to capital markets, to meet debt service obligations in a timely manner and be able to meet our objectives.
During the three months ended March 31, 2024, we recorded net income from operations of $1,870,424 and net income of $1,669,940. As of March 31, 2024, we have unrestricted cash of $24,432,226. Also, as of March 31, 2024, our current assets exceeded our current liabilities to result in working capital of $12,959,093 and our unrestricted cryptocurrency balance was reported at a cost basis of $232,834. Management does not believe there are any liquidity issues as of March 31, 2024.
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 months ended March 31, 2024, are not necessarily indicative of the operating results that may be expected for our year ending December 31, 2024, as will be included in the filing of our Annual Report on Form 10-K for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2023, consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.
| 24 |
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC, SAFETek, LLC, Investview Financial Group Holdings, LLC, Opencash Finance, Inc., Opencash Securities, LLC, Investview MTS, LLC, and MyLife Wellness Company. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Long-Lived Assets – 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 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 March, 31 2024 and December 31, 2023 were $232,834 and $585,632, respectively. Cryptocurrencies purchased or received for payment from customers are recorded in accordance with ASC 350-30 and cryptocurrencies awarded to the Company through its mining activities ($2,642,599 and $2,070,819 for the three months ended March 31, 2024 and 2023, respectively) are accounted for in connection with the Company’s revenue recognition policy. The use of cryptocurrencies is accounted for in accordance with the first in first out method of accounting. For the three months ended March, 31 2024 and 2023, we recorded realized gains on our cryptocurrency transactions of $276,227 and $242,572, respectively.
Impairment of Long-Lived Assets
We have adopted ASC Subtopic 360-10, Property, Plant and Equipment. ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by us be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value of an asset may no longer be appropriate. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.
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 three months ended March 31, 2024 and March 31, 2023, no impairment was recorded.
Revenue Recognition
Subscription Revenue
Most of our revenue is generated by membership and subscription sales and payment is received at the time of purchase. We recognize subscription revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first-time subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds, sales incentives, credits, and known and estimated credit card chargebacks. As of March 31, 2024 and December 31, 2023, our deferred revenues were $2,707,418 and $2,703,398, respectively.
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Mining Revenue
We generate revenue from mining bitcoin. The Company has entered into a digital asset mining pool by executing a contract, as amended from time to time, with the mining pool operator to provide computing power to the mining pool. The contract is terminable at any time by either party without penalty and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, we are entitled to a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator.
Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contract with the mining pool operator. The transaction consideration the Company receives is net of digital asset transaction fees kept by the mining pool operator and is noncash, in the form of Bitcoin, which the Company measures at fair value on the date Bitcoin is received. This value is not materially different than the fair value at the moment we meet the performance obligation, which can be recalculated based on the contractual formula. The consideration is variable. The amount of consideration recognized is constrained to the amount of consideration received, which is when it is probable a significant reversal will not occur. There is no significant financing component or risk of a significant revenue reversal in these transactions due to the performance obligations and settlement of the transactions being on a daily basis.
Cryptocurrency Revenue
During 2023, we generated revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party supplier. The various packages included different amounts of coin with differing rates of returns and terms. The coin is delivered by a third-party supplier. The sale of cryptocurrency packages was discontinued during the year ended December 31, 2023.
During 2023, we recognized cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation was to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment was received from our customers at the time of order placement. All customers were given two weeks to request a refund, therefore we would record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party supplier to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our supplier on our books. During the quarter ended March 31, 2024, we generated no revenue from the sale of cryptocurrency packages.
Miner Equipment Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, prior to June 30, 2023, we repaired broken mining equipment for sale to third-party customers. Our mining equipment repair business was discontinued during the quarter ended June 30, 2023.
Prior to June 30, 2023, we 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.
Revenue generated for the three months ended March, 31 2024, was as follows:
| Subscription Revenue | Mining Revenue | Total | ||||||||||
| Gross billings/receipts | $ | 13,851,294 | $ | 2,642,599 | $ | 16,493,893 | ||||||
| Refunds, incentives, credits, and chargebacks | (821,976 | ) | - | (821,976 | ) | |||||||
| Net revenue | $ | 13,029,318 | $ | 2,642,599 | $ | 15,671,917 | ||||||
For the three months ended March 31, 2024, foreign and domestic revenues were approximately $11.8 million and $3.9 million, respectively.
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Revenue generated for the three months ended March 31, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 12,152,522 | $ | 559,300 | $ | 2,070,819 | $ | 23,378 | $ | 14,806,019 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (960,411 | ) | - | - | - | (960,411 | ) | |||||||||||||
| Amounts paid to providers | - | (279,000 | ) | - | - | (279,000 | ) | |||||||||||||
| Net revenue | $ | 11,192,111 | $ | 280,300 | $ | 2,070,819 | $ | 23,378 | $ | 13,566,608 | ||||||||||
For the three months ended March 31, 2023, foreign and domestic revenues were approximately $9.7 million and $3.9 million, respectively.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company has not yet adopted ASU No. 2023-08 and is currently evaluating the impact that the adoption will have on the Company’s financial statement presentation and disclosures.
We have noted no other recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity, or capital expenditures.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.
ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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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 March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
There have been no material changes to this information since reported on in the Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 1.A – RISK FACTORS
There have been no material changes in the risk factors disclosed by us under Part I, Item 1A. Risk Factors contained in the Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 – OTHER INFORMATION
During the first quarter of the fiscal year ended December 31, 2024, no director of “officer” as defined in Rule 16a-1(f) under the Exchange Act adopted or terminated any Rule 10b5-1 trading plan or arrangements or any non-Rule 10b5-1 trading plan or arrangements, in both cases as defined in Item 408(a) of Regulation S-K.
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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 | |||
| 10.1 | Stock Purchase and Release Agreement dated February 6, 2024 | Incorporated by reference to the Current Report on Form 8-K filed on February 12, 2024. | ||
| Item 31 | Rule 13a-14(a)/15d-14(a) Certifications | |||
| 31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | This filing. | ||
| 31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | This filing. | ||
| Item 32 | Section 1350 Certifications | |||
| 32.01 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
| 32.02 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
| Item 101*** | Interactive Data File | |||
| 101.INS | Inline XBRL Instance Document | This filing. | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | This filing. | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | This filing. | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | This filing. | ||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | This filing. | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | This filing. | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | This filing. |
| * | All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document. Omitted numbers in the sequence refer to documents previously filed as an exhibit. |
| *** | Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability. |
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SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INVESTVIEW, INC. | ||
| Dated: May 14, 2024 | By: | /s/ Victor M. Oviedo |
| Victor M. Oviedo | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: May 14, 2024 | By: | /s/ Ralph R. Valvano |
| Ralph R. Valvano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Accounting Officer) | ||
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