INVU 10-Q/A
Investview, Inc. (INVU)
U.S. Securities and Exchange Commission
Washington, DC 20549
FORM
Amendment No. 1
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 12, 2021, there were shares of common stock, $0.001 par value, outstanding.
EXPLANTORY NOTE
Restatement Background
During the preparation of our consolidated financial statements for the nine months ended December 31, 2021, we reconsidered the manner in which we accounted for the acquisition of the operating assets, intellectual property rights and liabilities of MPower Trading Systems, LLC, a related party, which was consummated in September 2021 (the “Acquisition”). Originally, for the quarter ended September 30, 2021, we accounted for the Acquisition of all the assets and liabilities acquired at the nominal carrying value on MPower’s books, with no impact on our reported net income from operations. Accordingly, for the quarter ended September 30, 2021, we originally reported a net income amount of $17,147,249.
We subsequently determined that it was advisable to modify the manner in which the Acquisition was accounted for and recorded an increase to additional paid in capital for the appraised value of the Class B Redeemable Units issued to MPower in the Acquisition and to record an intangible asset on our books for the appraised value of the MPower assets acquired as of September 3, 2021. This resulted in a non-cash charge to operating expenses of $51,619,440 attributable to the Acquisition, which then caused the Company to report a net loss of $29,172,420 for the nine-months ended December 31, 2021. This charge was purely a non-cash charge that had no impact on the Company’s cash flow or liquidity and capital resources, and was derived from the value imbalance determined for accounting purposes, between the appraised value of the Class B Redeemable Units issued to MPower in the Acquisition versus the appraised value of the MPower assets acquired as of September 3, 2021, each such appraisal conducted under specific methodologies in accordance with appropriate auditing standards.
Except as described above, this Form 10-Q/A does not amend, update or change any other items or disclosures in the Original Report and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Form 10-Q/A speaks only as of the date the Original Report was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Report to give effect to any subsequent events. Accordingly, this Form 10-Q/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Report, including any amendment to those filings.
Items Amended in this Form 10-Q/A
This Form 10-Q/A presents the Original Report, amended and restated with modifications only to “Part I, Item 1. Financial Statements” and “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” to reflect the restatement. Additionally, in accordance with applicable SEC rules, this Form 10-Q/A includes certifications from our Principal Executive Officer and Principal Financial Officer dated as of the date of this Form 10-Q/A filing which are contained in “Part II, Item 6. Exhibits.”
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INVESTVIEW, INC.
Form 10-Q for the Six Months Ended September 30, 2021
Table of Contents
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PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
INVESTVIEW, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | March 31, | |||||||
| 2021 | 2021 | |||||||
| (unaudited) | ||||||||
| (as restated) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Prepaid assets | ||||||||
| Receivables | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Other assets: | ||||||||
| Restricted cash, long term | ||||||||
| Other restricted assets, long term | ||||||||
| Operating lease right-of-use asset | ||||||||
| Intangible asset, net | ||||||||
| Deposits | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Payroll liabilities | ||||||||
| Customer advance | ||||||||
| Deferred revenue | ||||||||
| Derivative liability | ||||||||
| Dividend liability | ||||||||
| Operating lease liability, current | ||||||||
| Related party payables, net of discounts, current | ||||||||
| Debt, net of discounts, current | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, long term | ||||||||
| Related party payables, net of discounts, long term | ||||||||
| Debt, net of discounts, long term | ||||||||
| Total long term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, par value: $; shares authorized, and issued and outstanding as of September 30, 2021 and March 31, 2021, respectively | ||||||||
| Common stock, par value $; shares authorized; and shares issued and outstanding as of September 30, 2021 and March 31, 2021, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INVESTVIEW, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (as restated) | (as restated) | |||||||||||||||
| Revenue: | ||||||||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | $ | $ | $ | ||||||||||||
| Mining revenue | ||||||||||||||||
| Cryptocurrency revenue, net of fees paid to providers | ||||||||||||||||
| Fee revenue | ||||||||||||||||
| Total revenue, net | ||||||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of sales and service | ||||||||||||||||
| Commissions | ||||||||||||||||
| Selling and marketing | ||||||||||||||||
| Salary and related | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Impairment Expense | ||||||||||||||||
| 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) applicable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic income (loss) per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted income (loss) per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic weighted average number of common shares outstanding | ||||||||||||||||
| Diluted weighted average number of common shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INVESTVIEW, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid in | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||||||||
| Balance, March 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Common stock issued for services | - | |||||||||||||||||||||||||||||||
| Share repurchase | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Beneficial conversion feature | - | - | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2020 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Preferred stock issued for cash | - | |||||||||||||||||||||||||||||||
| Offering costs | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Common stock issued for services and compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock forfeited | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Common stock repurchase | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Forgiveness of accrued payroll | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Preferred stock issued for cash | - | |||||||||||||||||||||||||||||||
| Preferred stock issued for cryptocurrency | - | |||||||||||||||||||||||||||||||
| Common stock issued for services and compensation | - | |||||||||||||||||||||||||||||||
| Common stock issued for warrant exercise | - | |||||||||||||||||||||||||||||||
| Derivative liability recorded for warrants issued with preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Derivative liability extinguished for warrants exercised | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services and compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock issued for warrant exercise | - | |||||||||||||||||||||||||||||||
| Common stock forfeited | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Derivative liability extinguished for warrants exercised | - | - | ||||||||||||||||||||||||||||||
| Class B units of subsidiary issued to a related party for asset acquisition | - | - | ||||||||||||||||||||||||||||||
| Contributed capital | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2021 (as restated) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INVESTVIEW INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| (as restated) | ||||||||
| 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 | ||||||||
| Amortization of intangible assets | ||||||||
| Stock issued for services and compensation | ||||||||
| Offering costs | ||||||||
| Lease cost, net of repayment | ||||||||
| (Gain) loss on asset acquisition | ||||||||
| (Gain) loss on debt extinguishment | ( | ) | ( | ) | ||||
| (Gain) loss on Class B Units of subsidiary issued to a related party for asset acquisition | ||||||||
| (Gain) loss on fair value of derivative liability | ( | ) | ( | ) | ||||
| Realized (gain) loss on cryptocurrency | ( | ) | ( | ) | ||||
| Impairment expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | ( | ) | ( | ) | ||||
| Prepaid assets | ( | ) | ( | ) | ||||
| Other current assets | ( | ) | ||||||
| Deposits | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Customer advance | ( | ) | ||||||
| Deferred revenue | ||||||||
| Other liabilities | ||||||||
| 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: | ||||||||
| Proceeds from related party payables | ||||||||
| Repayments for related party payables | ( | ) | ( | ) | ||||
| Proceeds from debt | ||||||||
| Repayments for debt | ( | ) | ( | ) | ||||
| Payments for share repurchase | ( | ) | ||||||
| Dividends paid | ( | ) | ( | ) | ||||
| Proceeds from the sale of preferred stock | ||||||||
| Proceeds from the exercise of warrants | ||||||||
| Payments for financing costs | ( | ) | ||||||
| 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: | ||||||||
| Prepaid assets reclassified to fixed assets | $ | $ | ||||||
| Beneficial conversion feature | $ | $ | ||||||
| Shares forfeited | $ | $ | ||||||
| Share repurchase | $ | $ | ||||||
| Reclassification of related party debt | $ | $ | ||||||
| Dividends declared but not yet paid | $ | $ | ||||||
| Forgiveness of accrued payroll | $ | $ | ||||||
| Derivative liability recorded for warrants issued | $ | $ | ||||||
| Derivative liability extinguished with warrant exercise | $ | $ | ||||||
| Preferred shares issued in exchange for cryptocurrency | $ | $ | ||||||
| Dividends declared | $ | $ | ||||||
| Dividends paid with cryptocurrency | $ | $ | ||||||
| Debt and related party debt extinguished in exchange for cryptocurrency | $ | $ | ||||||
| Related party debt extinguished in exchange for cryptocurrency | $ | $ | ||||||
| Fixed asset acquired with cryptocurrency | $ | $ | ||||||
| Initial right of use asset and lease liability | $ | $ | ||||||
| Net assets acquired for noncontrolling interest in subsidiary | $ | $ | ||||||
| Contributed capital | $ | $ | ||||||
| Class B units of subsidiary issued to a related party for asset acquisition | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Organization
Investview,
Inc. (“we”, “our”, the “Company”) was incorporated on
On March 31, 2017, we entered into a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company (“Wealth Generators”), pursuant to which the Wealth Generators members agreed to contribute % of the outstanding securities of Wealth Generators in exchange for an aggregate of shares of our common stock. The closing of the Contribution Agreement was effective April 1, 2017, and Wealth Generators became our wholly owned subsidiary and the former members of Wealth Generators became our stockholders and control 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”) and on May 7, 2018 we established WealthGen Global, LLC as a Utah limited liability company and a wholly owned subsidiary of Investview, Inc.
On July 20, 2018, we entered into a Purchase Agreement with United Games Marketing LLC, a Utah limited liability company, to purchase its wholly owned subsidiaries United Games, LLC and United League, LLC for shares of our common stock.
On November 12, 2018, we established Kuvera France, S.A.S. to handle sales of our financial education and research in the European Union.
On December 30, 2018, our wholly owned subsidiary S.A.F.E. Management, LLC received its registration and disclosure approval from the National Futures Association. S.A.F.E. Management, LLC is now a New Jersey State Registered Investment Adviser, Commodities Trading Advisor, Commodity Pool Operator, and approved for over-the-counter FOREX advisory services.
On January 17, 2019, we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SAFETek, LLC, a Utah Limited Liability Company.
On March 26, 2019, we established Kuvera (N.I.) LTD, a Northern Ireland entity as a wholly owned subsidiary of Kuvera, LLC, however, to date the subsidiary has had no operations.
Effective July 22, 2019, we renamed our non-operating wholly owned subsidiary Razor Data, LLC to APEX Tek, 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
March 18, 2021, we established Investview Financial Group Holdings, LLC and Investview MTS, LLC as wholly owned subsidiaries of Investview,
Inc. On March 22, 2021, we entered into a Securities Purchase Agreement with SSA Technologies LLC to purchase
| 8 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
Nature of Business
Our portfolio of wholly owned subsidiaries operates in the financial technology (FINTECH) sector, leveraging the latest innovations in technology for financial education, services and interactive tools. Our subsidiaries focus on delivering products that serve individuals around the world. From personal money management to advancements in blockchain technologies, our companies are forging a path for individuals to take advantage of financial and technical innovations. Each of our subsidiaries are designed to work in tandem with one another generating a worldwide presence.
Our largest subsidiary in terms of revenue is iGenius, LLC. iGenius leverages a worldwide distribution network, also known as a multi-level marketing network, to provide financial education, technology and tools geared towards self-directed retail investors. Each iGenius membership provides a core set of financial education resources including live market training sessions, a robust library of financial education videos and courses, market calendars, and a variety of research and trade alert channels. These tools provide access to the information necessary to manage and improve one’s financial position. In addition to the financial education technology and tools, iGenius members also gain access to a variety of benefits provided through third party partnerships and arrangements. Some of these third-party products and services include cryptocurrency packages, discounted travel, crypto trading software and a digital wallet platform. iGenius members who choose to distribute the iGenius products and services can qualify to earn commissions and bonuses for selling memberships and retaining customers under the framework of a network marketing bonus plan.
Kuvera France S.A.S. was our entity in France and iGenius Global LTD is our entity in Northern Ireland. These entities were responsible for distributing our products and services throughout the European Union. Kuvera France S.A.S. was closed in June 2021.
S.A.F.E. Management, LLC (“SAFE”) is a Registered Investment Adviser and Commodity Trading Adviser that has been established to deliver automated trading strategies to individuals who find they lack the time to trade for themselves. SAFE is committed to bringing innovative trade methodologies, strategies, and algorithms for all worldwide financial markets. SAFE will be structured under the Investview Financial Group Holdings, LLC and is planned to relaunch their services primarily focused on commodities and FOREX as a Commodity Trading Advisor.
SAFETek, LLC is a Blockchain technology company that provides leading-edge research, development, and management of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. SAFETek’s Bitcoin mining operations in North America and other international locations aim to maintain optimal efficiency and profitability while running on sustainable, low-cost, and/or renewable energy sources. At these locations, SAFETek manages nearly 10,000 next-generation Bitcoin ASIC miner machines, with over 80% powered by renewable energy. SAFETek is also developing new and more efficient ways to mine cryptocurrencies through innovations in hardware, liquid immersion, firmware, and additional ways to develop and utilize renewable energy sources. The majority of this development and innovation work occurs at SAFETek’s 20,000 square foot facility in Texas that was opened in May 2021. At this facility, SAFETek operates a 24/7/365 Managed Network Operation Center (NOC) to achieve higher efficiency, productivity, and availability, a Bitcoin ASIC Miner Repair Service to clean, refurbish and optimize existing Bitcoin Mining Servers, a research and development center to test and develop new Bitcoin Mining firmware and liquid immersion systems, and a manufacturing facility to build mobile Bitcoin Mining Data Center Facilities. With these products and services, SAFETek aims to increase the hashrate, uptime, profitability, and overall ROI of crypto currency mining operations for ourselves and for our customers.
Apex Tek, LLC was the entity responsible for sales of the APEX program. Launched in September 2019, the APEX product pack included hardware, firmware, software and purchase protection that was purchased and then leased to SAFETek LLC. We have currently ceased selling the APEX package and bought back all leases associated with the business. There are currently no operations or activity in Apex Tek, LLC.
United Games, LLC, United League, LLC, and Investment Tools & Training, LLC have had no operations and will be restructured or eliminated. Investview Financial Group Holdings, LLC and Investview MTS, LLC will be used in conjunction with our anticipated acquisition of the operating assets of SSA Technologies LLC, an entity that owns and operates LevelX Capital LLC, a FINRA registered broker-dealer and LevelX Advisors LLC, a registered investment advisor. Investview Financial Group Holdings, LLC owns Prodigio, a proprietary software-based trading platform with applications in the brokerage industry.
| 9 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Our financial statements are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Prior to September 20, 2021, we operated the Company on a March 31 fiscal year end. Effective September 20, 2021, our Board of Directors acted by unanimous written consent to change our fiscal year end to December 31.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the six months ended September 30, 2021, are not necessarily indicative of the operating results that may be expected for the filing of our December 31, 2021 Form 10-K that will cover the transition period for our new fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the March 31, 2021 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2021.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC, Kuvera France S.A.S., Apex Tek, LLC, SAFETek, LLC, S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC, iGenius Global LTD, Investview Financial Group Holdings, LLC, and Investview MTS, 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.
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. are conducted in France and its functional currency is the Euro.
The financial statements of Kuvera France S.A.S. are prepared using their functional currency and have been translated into U.S. dollars (“USD”). Assets and liabilities are translated into USD at the applicable exchange rates at period-end. Stockholders’ equity is translated using historical exchange rates. Revenue and expenses are translated at the average exchange rates for the period. Any translation adjustments are included as foreign currency translation adjustments in accumulated other comprehensive income in our stockholders’ equity (deficit).
| 10 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
The following rates were used to translate the accounts of Kuvera France S.A.S. into USD at the following balance sheet dates.
| September 30, 2021 | March 31, 2021 | |||||||
| Euro to USD | ||||||||
The following rates were used to translate the accounts of Kuvera France S.A.S. into USD for the following operating periods.
| Six Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Euro to USD | ||||||||
Restricted Cash
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, 2021 | March 31, 2021 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Restricted cash, long term | ||||||||
| Total cash, cash equivalents, and restricted cash shown on the statement of cash flows | $ | $ | ||||||
Amount included in restricted cash represent funds required to be held in an escrow account by a contractual agreement and will be used for paying dividends to our Series B Preferred Stockholders.
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, 2021 | March 31, 2021 | ||||||||
| Furniture, fixtures, and equipment | $ | $ | ||||||||
| Computer equipment | ||||||||||
| Leasehold improvements | ||||||||||
| Trailers | ||||||||||
| Data processing equipment | ||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||
| Net book value | $ | $ | ||||||||
Total
depreciation expense for the six months ended September 30, 2021 and 2020, was $
Long-Lived Assets – Intangible Assets & License Agreement
We account for our cryptocurrencies, intangible assets and long-term license agreement in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30 requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
| 11 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
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, 2021 and March 31, 2021 were $
In
June of 2018 we purchased United Games, LLC and United League, LLC and recorded the transaction as a business combination. Intangible
assets acquired in the business combination were recorded at fair value on the date of acquisition and were being amortized on a straight-line
method over their estimated useful lives. The intangible assets were impaired during the year ended March 31, 2021 due to a lack of recoverability,
therefore we had
On
March 22, 2021, we entered into Securities Purchase Agreement to acquire the operating assets and intellectual property rights of MPower
Trading Systems LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members (see NOTE
10). As a result, upon the closing of the transaction on September 3, 2021, we obtained Prodigio, a proprietary software-based trading
platform with applications within the brokerage industry, which was valued at $
Impairment of Long-Lived Assets
We have adopted ASC Subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value of an asset may no longer be appropriate. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.
We evaluate the recoverability of long-lived assets based upon future net cash flows expected to result from the asset, including eventual disposition. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted and an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.
During
the six months ended September 30, 2021 we fully impaired data processing equipment that had a cost basis of $
During
the six months ended September 30, 2020 we fully impaired data processing equipment that had a cost basis of $
| 12 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
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, accounts payable, and debt. We have determined that the book value of our outstanding financial instruments as of September 30, 2021 and March 31, 2021, approximates the fair value due to their short-term nature or interest rates that approximate prevailing market rates.
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of September 30, 2021:
| 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 March 31, 2021:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
Revenue Recognition
Subscription Revenue
The
majority 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 10-day 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 product. 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, 2021 and March 31, 2021 our deferred
revenues were $
| 13 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
Mining Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we leased computer 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 computer equipment. We use the computer equipment to validate and process public blockchain transactions (commonly referred to as “mining”). As compensation for mining, we are issued block rewards and transaction fees from public blockchain networks in the form of newly created cryptocurrency units. Our mining activities constitute the ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately granted to us as a result of our mining activities.
Cryptocurrency Revenue
We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party providers. The various packages include different amounts of coin with differing rates of returns and terms and, in some cases, include a product protection option that allows the purchaser to protect their initial purchase price. The protection allows the purchaser to obtain 50% of their purchase price at five years or 100% of their purchase price at ten years. Both the coin and the protection option are delivered by third-party providers.
We
recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract
with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to
arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers
at the time of order placement. All customers are given two weeks to request a refund, therefore we record a customer advance on our
balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party providers to
deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our providers on our books. As
of September 30, 2021 and March 31, 2021 our customer advances related to cryptocurrency revenue were $
Fee Revenue
We generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory fees in the month following recognition.
Revenue generated for the six months ended September 30, 2021 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
For
the six months ended September 30, 2021 foreign and domestic revenues were approximately $
| 14 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
Revenue generated for the six months ended September 30, 2020 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to providers | ||||||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
For
the six months ended September 30, 2020 foreign and domestic revenues were approximately $
Revenue generated for the three months ended September 30, 2021 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to providers | ( | ) | ( | ) | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
For
the three months ended September 30, 2021 foreign and domestic revenues were approximately $
Revenue generated for the three months ended September 30, 2020 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to providers | ||||||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
For
the three months ended September 30, 2020 foreign and domestic revenues were approximately $
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.
| 15 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
| September 30, 2021 | September 30, 2020 | |||||||
| Warrants to purchase common stock | ||||||||
| Notes convertible into common stock | ||||||||
| Class B Redeemable Units of Investview Financial Group Holdings, LLC | ||||||||
| Totals | ||||||||
Lease Obligation
We determine if an arrangement is a lease at inception. Operating leases are included in the operating lease right-of-use asset account, the operating lease liability, current account, and the operating lease liability, long term account in our balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have elected to not apply the recognition requirements of ASC 842 to short-term leases (leases with terms of twelve months or less). Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term. We have elected the practical expedient and will not separate non-lease components from lease components and will instead account for each separate lease component and non-lease component associated with the lease components as a single lease component.
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Under current GAAP, there are five accounting models for convertible debt instruments. ASU 2020-06 removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adopting the ASU’s guidance, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium. Additionally, for convertible debt instruments with substantial premiums accounted for as paid-in capital, the FASB decided to add disclosures about (1) the fair value amount and the level of fair value hierarchy of the entire instrument for public business entities and (2) the premium amount recorded as paid-in capital. ASU 2020-06 will be effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the potential impact of the adoption of this accounting pronouncement to its financial statements.
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.
| 16 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
NOTE 4 – RELATED-PARTY TRANSACTIONS
Our related-party payables consisted of the following:
| September 30, 2021 | March 31, 2021 | |||||||
| Convertible Promissory Note entered into on 4/27/20, net of debt
discount of $ | $ | $ | ||||||
| Convertible Promissory Note entered into on 5/27/20, net of debt discount of $ | ||||||||
| Convertible Promissory Note entered into on 11/9/20, net of debt discount of $ | ||||||||
| Accounts payable – related party [4] | ||||||||
| Notes for APEX lease buyback [5] | ||||||||
| Promissory note entered into on 12/15/20, net of debt discount of $ | ||||||||
| Convertible Promissory Note entered into on 3/30/21, net of debt discount of $ | ||||||||
| Working Capital Promissory Note entered into on 3/22/21 [8] | ||||||||
| Total related-party debt | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Related-party debt, long term | $ | $ | ||||||
| [1] | |
| [2] | |
| [3] | |
| [4] | |
| [5] | |
| [6] | |
| [7] | |
| [8] |
| 17 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
In
addition to the above related party debt transactions that were outstanding as of September 30, 2021 and March 31, 2021, during the six
months ended September 30, 2021 we obtained a short-term advance of $
In
addition to the above-mentioned related-party lending arrangements, during the six months ended September 30, 2021 we sold cryptocurrency
packages to related parties for gross proceeds of $
NOTE 5 – DEBT
Our debt consisted of the following:
| September 30, 2021 | March 31, 2021 | |||||||
| Short-term advance received on 8/31/18 [1] | $ | $ | ||||||
| Note issued under the Paycheck Protection Program on 4/17/20 [2] | ||||||||
| Loan with the U.S. Small Business Administration dated 4/19/20 [3] | ||||||||
| Long term notes for APEX lease buyback [4] | ||||||||
| Total debt | ||||||||
| Less: Current portion [12] | ( | ) | ( | ) | ||||
| Debt, long term portion | $ | $ | ||||||
| [1] | |
| [2] | |
| [3] | |
| [4] |
| 18 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
NOTE 6 – DERIVATIVE LIABILITY
During the six months ended September 30, 2021, we had the following activity in our derivative liability account:
| Debt | Warrants | Total | ||||||||||
| Derivative liability at March 31, 2021 | $ | $ | $ | |||||||||
| Derivative liability recorded on new instruments | ||||||||||||
| Derivative liability reduced by warrant exercise (see NOTE 7) | ( | ) | ( | ) | ||||||||
| (Gain) loss on fair value | ( | ) | ( | ) | ||||||||
| Derivative liability at September 30, 2021 | $ | $ | $ | |||||||||
We use the binomial option pricing model to estimate fair value for those instruments convertible into common stock, at inception, at conversion or settlement date, and at each reporting date. During the six months ended September 30, 2021, the assumptions used in our binomial option pricing model were in the following range:
| Debt | Warrants | |||||||
| Risk free interest rate | ||||||||
| Expected life in years | n/a | |||||||
| Expected volatility | ||||||||
NOTE 7 – 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.
During
the year ended March 31, 2020 our Board of Directors approved the designation of
As of March 31, 2020, we had preferred stock issued or outstanding.
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:
| 19 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
During
the six months ended September 30, 2021 we sold units for a total of $
Preferred Stock Dividends
During
the six months ended September 30, 2021 we recorded $
Common Stock
During
the six months ended September 30, 2021, we issued shares of common stock for services and compensation and recognized a total
of $ in stock-based compensation based on grant date fair values and vesting terms of the awards granted in the current and
prior periods. We also issued
As of September 30, 2021 and March 31, 2021, we had and shares of common stock issued and outstanding, respectively.
Warrants
During
the six months ended September 30, 2021 we granted warrants in conjunction with our Unit Offering. The warrants, valued at $
Transactions involving our warrants are summarized as follows:
| Weighted | ||||||||
| Number of | Average | |||||||
| Shares | Exercise Price | |||||||
| Warrants outstanding at March 31, 2021 | $ | |||||||
| Granted | $ | |||||||
| Canceled/Expired | $ | |||||||
| Exercised | ( | ) | $ | |||||
| Warrants outstanding at September 30, 2021 | $ | |||||||
Details of our warrants outstanding as of September 30, 2021 is as follows:
| Exercise Price | Warrants Outstanding | Warrants Exercisable | Weighted Average Contractual Life (Years) | |||||||||||
| $ | ||||||||||||||
Class B Redeemable Units of Investview Financial Group Holdings, LLC
During
the nine months ended December 31, 2021 we issued Class B Redeemable Units of Investview Financial Group Holdings, LLC as
consideration for the purchase of operating assets and intellectual property rights of MPower Trading Systems, LLC, a company controlled
and partially owned by David B. Rothrock and James R. Bell, two of our board members (see NOTE 10). The Class B Redeemable Units have
no voting rights but can be exchanged at any time, within
| 20 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Litigation
In the ordinary course of business, we may be, or have been, involved in legal proceedings from time to time.
During the six months ended September 30, 2021 we were not involved in any material legal proceedings, however, we have recently received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. We have reason to believe that the focus of the SEC’s inquiry involves whether certain federal securities laws were violated in connection with, among other things, the offer and sale of cryptocurrency products and the operation of our subscription-based multi-level marketing business now known as iGenius. In the subpoena, the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities laws and or any other law. We believe that we have complied at all times with the federal securities laws. However, we are aware of the evolving SEC commentary and rulemaking process relative to the characterization of cryptocurrency products under federal securities laws that is sweeping through a large number of businesses that operate within the cryptocurrency sector. We intend to cooperate fully with the SEC’s investigation and will continue to work with outside counsel to review the matter.
NOTE 9 – OPERATING LEASE
In August 2019 we entered an operating lease for office space in Eatontown, New Jersey (the “Eatontown Lease”), in September 2019 we entered an operating lease for office space in Kaysville, Utah (the “Kaysville Lease”), in May 2021 we entered an operating lease for office space in Conroe, Texas (the “Conroe Lease”), in July 2021 we entered an operating lease for office space in Wyckoff, New Jersey (the “Wyckoff Lease”), and in September 2021 we acquired an operating lease for office space in Haverford, Pennsylvania (the “Haverford Lease”) in connection with the MPower acquisition (See NOTE 10).
At
commencement of the Eatontown Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
commencement of the Kaysville Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
commencement of the Conroe Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
commencement of the Wyckoff Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
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, 2021were as follows:
| Remainder of 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| Total | ||||
| Less: Interest | ( | ) | ||
| Present value of lease liability | ||||
| Operating lease liability, current [1] | ( | ) | ||
| Operating lease liability, long term | $ |
| [1] |
| 21 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
NOTE 10 – ACQUISITION & NONCONTROLLING INTEREST IN SUBSIDIARY
On
March 22, 2021, we entered into a Securities Purchase Agreement to purchase the operating assets and intellectual property rights of
MPower Trading Systems, LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members,
in exchange for nonvoting Class B Units of Investview Financial Group Holdings, LLC (“Units”). This acquisition
closed on September 3, 2021 and we acquired an office lease, furniture and fixtures, and Prodigio, a proprietary software-based trading
platform with applications in the brokerage industry. The Units can be exchanged at any time, within
The
Company determined that as of the date of the acquisition, the fair value of the Prodigio Trading Platform software was $
| Purchase price (fair value of Units) | $ | |||
| Intangible asset (Prodigio software) | ||||
| Loss on asset acquisition | $ |
NOTE 11 – 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 except as noted below.
In
November 2021 we were notified that the U.S. Small Business Administration had approved the forgiveness of our Paycheck Protection Program
loan, in the amount of $
NOTE 12 – RESTATEMENT
The Company has restated its condensed consolidated interim financial statements for September 30, 2021 that were originally presented in a Form 10-Q filed on November 22, 2021. The nature and impact of these adjustments are described below and detailed in the tables below.
During
the preparation of our financial statements for the nine months ended December 31, 2021, we determined we would change the way we accounted
for the acquisition of the operating assets, intellectual property rights and liabilities of MPower Trading Systems, LLC, a related party,
which was consummated in September 2021 (the “Acquisition”). Originally, for the three and six ended September 30, 2021,
we accounted for the Acquisition of all the assets and liabilities acquired at the nominal carrying value on MPower’s books. However,
after further consideration, we determined it reasonable to increase additional paid in capital for the appraised value of the Class
B Redeemable Units issued to MPower in the Acquisition and to record an intangible asset on our books for the appraised value of the
MPower assets acquired as of September 3, 2021. This resulted in a non-cash charge to operating expenses of $
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INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
Changes to the Balance Sheet
| As of September 30, 2021 (unaudited) | ||||||||||||
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Intangible asset, net | $ | $ | $ | |||||||||
| Total assets | $ | $ | $ | |||||||||
| Additional paid in capital | $ | $ | $ | |||||||||
| Accumulated deficit | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Total stockholders’ equity (deficit) | $ | $ | $ | |||||||||
Changes to the Statement of Operations
| Six Months Ended September 30, 2021 (unaudited) | ||||||||||||
| As Previously Reported | Adjustment | As Restated | ||||||||||
| General and administrative expenses | $ | $ | $ | |||||||||
| Total operating costs and expenses | $ | $ | $ | |||||||||
| Net income (loss) from operations | $ | $ | ( | ) | $ | ( | ) | |||||
| Income (loss) before income taxes | $ | $ | ( | ) | $ | ( | ) | |||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | |||||
| Net income (loss) applicable to common shareholders | $ | $ | ( | ) | $ | ( | ) | |||||
| Comprehensive income (loss) applicable to common shareholders | $ | $ | ( | ) | $ | ( | ) | |||||
| Basic income (loss) per common share | $ | $ | ( | ) | $ | ( | ) | |||||
| Diluted income (loss) per common share | $ | $ | ( | ) | $ | ( | ) | |||||
| Three Months Ended September 30, 2021 (unaudited) | ||||||||||||
| As Previously Reported | Adjustment | As Restated | ||||||||||
| General and administrative expenses | $ | $ | $ | |||||||||
| Total operating costs and expenses | $ | $ | $ | |||||||||
| Net income (loss) from operations | $ | $ | ( | ) | $ | ( | ) | |||||
| Income (loss) before income taxes | $ | $ | ( | ) | $ | ( | ) | |||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | |||||
| Net income (loss) applicable to common shareholders | $ | $ | ( | ) | $ | ( | ) | |||||
| Comprehensive income (loss) applicable to common shareholders | $ | $ | ( | ) | $ | ( | ) | |||||
| Basic income (loss) per common share | $ | $ | ( | ) | $ | ( | ) | |||||
| Diluted income (loss) per common share | $ | $ | ( | ) | $ | ( | ) | |||||
Changes to the Statement of Cash Flows
| Six Months Ended September 30, 2021 (unaudited) | ||||||||||||
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | |||||
| (Gain) loss on Class B Units of subsidiary issued to a related party for asset acquisition | $ | $ | $ | |||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Class B units of subsidiary issued to a related party for asset acquisition | $ | $ | $ | |||||||||
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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
Investview, Inc. (“we”, “our”, the “Company”) is a publicly traded diversified financial technology company with the symbol OTCQB:INVU. We operate through our family of wholly owned subsidiaries to provide dynamic financial education, diversified investment tools, global market research, self-directed brokerage services, institutional trade execution services, innovative advisory services (RIA, CTA), codeless algorithmic trading technologies, crypto mining, optimization, and repair solutions, and adaptive blockchain technologies.
We have spent the majority of fiscal 2021 establishing the company as a FINTECH provider of services. The Company’s objective is to provide a suite of offerings that advance financial technology initiatives in the personal finance, global markets, high speed processing optimization and crypto mining operations.
Our largest subsidiary in terms of revenue is iGenius, LLC. iGenius leverages a worldwide distribution network to provide financial education, technology and tools geared towards self-directed retail investors. Each iGenius membership provides a core set of financial education resources including live market training sessions, a robust library of financial education videos and courses, market calendars, and a variety of research and trade alert channels. These tools provide access to the information necessary to manage and improve one’s financial position. In addition to the financial education technology and tools, iGenius members also gain access to a variety of benefits provided through third party partnerships and arrangements. Some of these third-party products and services include cryptocurrency packages, discounted travel, crypto trading software and a digital wallet platform. iGenius members who choose to distribute the iGenius products and services can qualify to earn commissions and bonuses for selling memberships and retaining customers under the framework of a network marketing bonus plan.
Kuvera France S.A.S. was our entity in France and iGenius Global LTD is our entity in Northern Ireland. These entities were responsible
for distributing our products and services throughout the European Union. Kuvera France S.A.S. was closed in June of 2021.
S.A.F.E. Management, LLC (“SAFE”) is a Registered Investment Adviser and Commodity Trading Adviser that has been established to deliver automated trading strategies to individuals who find they lack the time to trade for themselves. SAFE is committed to bringing innovative trade methodologies, strategies, and algorithms for all worldwide financial markets. SAFE will be structured under the Investview Financial Group Holdings, LLC and is planned to relaunch their services primarily focused on commodities and FOREX as a Commodity Trading Advisor.
SAFETek, LLC is a Blockchain technology company that provides leading-edge research, development, and management of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. SAFETek’s Bitcoin mining operations in North America and other international locations aim to maintain optimal efficiency and profitability while running on sustainable, low-cost, and/or renewable energy sources. At these locations, SAFETek manages nearly 10,000 next-generation Bitcoin ASIC miner machines, with over 80% powered by renewable energy. SAFETek is also developing new and more efficient ways to mine cryptocurrencies through innovations in hardware, liquid immersion, firmware, and additional ways to develop and utilize renewable energy sources. The majority of this development and innovation work occurs at SAFETek’s 20,000 square foot facility in Texas that was opened in May 2021. At this facility, SAFETek operates a 24/7/365 Managed Network Operation Center (NOC) to achieve higher efficiency, productivity, and availability, a Bitcoin ASIC Miner Repair Service to clean, refurbish and optimize existing Bitcoin Mining Servers, a research and development center to test and develop new Bitcoin Mining firmware and liquid immersion systems, and a manufacturing facility to build mobile Bitcoin Mining Data Center Facilities. With these products and services, SAFETek aims to increase the hashrate, uptime, profitability, and overall ROI of crypto currency mining operations for ourselves and for our customers.
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Apex Tek, LLC was the entity responsible for sales of the APEX program. Launched in September 2019, the APEX product pack included hardware, firmware, software and purchase protection that was purchased and then leased to SAFETek, LLC. We have currently ceased selling the APEX package and bought back all leases associated with the business. There are currently no operations or activity in Apex Tek, LLC.
United Games, LLC, United League, LLC, and Investment Tools & Training, LLC have had no operations and will be restructured or eliminated. Investview Financial Group Holdings, LLC and Investview MTS, LLC will be used in conjunction with our anticipated acquisition of the operating assets of SSA Technologies LLC, an entity that owns and operates LevelX Capital LLC, a FINRA registered broker-dealer and LevelX Advisors LLC, a registered investment advisor. Investview Financial Group Holdings, LLC owns Prodigio, a proprietary software-based trading platform with applications in the brokerage industry.
Results of Operations
Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020
Revenues
We recorded net revenue of $23,371,100 for the three months ended September 30, 2021, which was an increase of $15,617,763 or 201%, from the prior period net revenue of $7,753,337. The increase can be explained by an increase of Bitcoin value, an increase in active Bitcoin miners, the introduction of NDAU, the world’s first adaptive digital currency product, and improvements to our iGenius product offerings and distribution in new markets.
Our gross billings increased by 216%, or $17,475,725, to $25,572,329 in the three months ended September 30, 2021, versus $8,096,604 in the three months ended September 30, 2020, as a result of the activity noted above.
Operating Costs and Expenses
We recorded operating costs and expenses of $67,586,958 for the three months ended September 30, 2021, which was an increase of $60,337,993, or 832%, from the prior period’s operating costs and expenses of $7,248,965. $51,619,440 of that increase was attributable to a non-recurring and non-cash charge arising from the manner in which the acquisition of the Prodigio Smart Trading Platform, as well as the other operating assets and intellectual property rights of MPower Trading Systems, LLC, was accounted for on our financial statements, and did not represent a degradation in our cash flow or our liquidity and capital resources. After removing the charge relating to the September 3, 2021 transaction with MPower, the remaining increase of $8,718,553 can be explained, in general, by the growth of our operations and increases in our revenue. Specifically, there was an increase in our commissions of $6,518,278, or 191%, from $3,416,713 for the three months ended September 30, 2020, to $9,934,991 for the three months ended September 30, 2021. There was also an increase in our general and administrative expenses of $2,113,314, or 579%, from $364,826 for the three months ended September 30, 2020, to $2,478,140 for the three months ended September 30, 2021. The increase in commissions was a result of the increase in subscription and cryptocurrency revenue and the increase in general and administrative expenses was due to our cancellation of 200,000,000 shares that were returned in the three months ended September 30, 2020 in conjunction with the termination of a Joint Venture Agreement which resulted in the reversal of previously recorded expense of $951,956, thus offsetting total general and administrative expenses by that amount. No similar cancellation or reversal of expenses occurred in the current period.
Other Income and Expenses
We recorded other income (expense) of $971,767 for the three months ended September 30, 2021, which was a difference of $2,661,602, or 158%, from the prior period other income (expense) of $(1,689,835). The change is mostly due a decrease in interest expense from $2,480,067 in the three months ended September 30, 2020 compared to interest expense of $6,000 in the three months ended September 30, 2021 and an increase in realized gain on cryptocurrency from $86,427 for the three months ended September 30, 2020 versus $1,651,024 for the three months ended September 30, 2021. The decrease in the interest expense from the prior period was due to our efforts to restructure debt and payoff high-interest borrowings and the increase in the realized gain on cryptocurrency was simply due to the change in market value of cryptocurrency from the point at which we obtained the digital coins versus when we used the digital coins.
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Six Months Ended September 30, 2021 Compared to Six Months Ended September 30, 2020
Revenues
We recorded net revenue of $48,997,665 for the six months ended September 30, 2021, which was an increase of $35,654,512 or 267%, from the prior period net revenue of $13,343,153. The increase can be explained by an increase of Bitcoin value, an increase in active Bitcoin miners, the introduction of NDAU, the world’s first adaptive digital currency product, and improvements to our iGenius product offerings and distribution in new markets.
Our gross billings increased by 338%, or $47,348,406, to $61,351,529 in the six months ended September 30, 2021, versus $14,003,123 in the six months ended September 30, 2020, as a result of the activity noted above.
Operating Costs and Expenses
We recorded operating costs and expenses of $82,676,073 for the six months ended September 30, 2021, which was an increase of $66,830,494, or 422%, from the prior period’s operating costs and expenses of $15,845,579. $51,619,440 of that increase was attributable to a non-recurring and non-cash charge arising from the manner in which the acquisition of the Prodigio Smart Trading Platform, as well as the other operating assets and intellectual property rights of MPower Trading Systems, LLC, was accounted for on our financial statements, and did not represent a degradation in our cash flow or our liquidity and capital resources. After removing the charge relating to the September 3, 2021 transaction with MPower, the remaining increase of $31,056,633 can be explained, in general, by the growth of our operations and increases in our revenue. Specifically, there was an increase in our commissions of $11,926,868, or 176%, from $6,790,544 for the six months ended September 30, 2020, to $18,717,412 for the six months ended September 30, 2021. Also, there was an increase in general and administrative expenses of $1,715,006, or 61%, from $2,809,618 for the three months ended September 30, 2020, to $4,524,624 for the three months ended September 30, 2021. The increase in commissions was a result of the increase in subscription and cryptocurrency revenue and the increase in general and administrative expenses was due to our cancellation of 200,000,000 shares that were returned in the six months ended September 30, 2020 in conjunction with the termination of a Joint Venture Agreement which resulted in the reversal of previously recorded expense of $951,956, thus offsetting total general and administrative expenses by that amount. No similar cancellation or reversal of expenses occurred in the current period.
Other Income and Expenses
We recorded other income (expense) of $(789,836) for the six months ended September 30, 2021, which was a difference of $2,806,003, or 78%, from the prior period other income (expense) of $(3,595,839). The change is mostly due a decrease in interest expense from $4,727,165 in the six months ended September 30, 2020 compared to interest expense of $11,934 in the six months ended September 30, 2021, offset by an increase in interest expense, related parties from $389,720 in the six months ended September 30, 2020 compared to $1,523,477 for the six months ended September 30, 2021. The decrease in the interest expense from the prior period was due to our efforts to restructure debt and payoff high-interest borrowings and the increase in the interest expense, related parties was due to the Company obtaining funding from related parties in the form of convertible debt, which resulted in beneficial conversion features being recorded at the time of the borrowing and the debt discount being amortized to interest expense, related party, over the term of the notes.
Liquidity and Capital Resources
During the six months ended September 30, 2021, we recorded a net loss of $34,472,191 which included a one-time non-recurring charge of $51,619,440 arising from the acquisition of the Prodigio Smart Trading Platform, as well as the operating assets and intellectual property rights of MPower; more particularly, the issuance of the Class B Redeemable Units in that transaction. This charge was a non-cash charge that had no impact on our cash flow or our liquidity and capital resources and related purely to the value imbalance determined for accounting purposes, between the appraised value of the Class B Redeemable Units issued to MPower versus the appraised value of the MPower assets acquired as of September 3, 2021, each such appraisal conducted under specific methodologies as determined to be in accordance with applicable accounting standards.
During the six months ended September 30, 2021, excluding the impact of our one-time non-cash charge of $51,619,440 arising from the issuance of the Class B Redeemable Units when we acquired the operating assets and intellectual property rights of MPower on September 3, 2021, we recorded net income of $17,147,249. Additionally, during the period, we generated $14,657,763 in cash through our operating activities, and generated $1,959,678 through financing activities. We used this cash to fund operations and fund the purchase of $843,990 worth of fixed assets. As a result, our cash, cash equivalents, and restricted cash increased by $15,771,769 to $22,433,596 as compared to $6,661,827 at the beginning of the fiscal year.
As of September 30, 2021, our current assets exceeded our current liabilities to result in working capital of $19,397,106, which was an increase from the working capital of $2,005,538 as of March 31, 2021.
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Critical Accounting Policies
Basis of Presentation
Our financial statements are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Prior to September 20, 2021 we operated the Company on a March 31 fiscal year end. Effective September 20, 2021, our Board of Directors acted by unanimous written consent to change our fiscal year end to December 31.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the six months ended September 30, 2021, are not necessarily indicative of the operating results that may be expected for the filing of our December 31, 2021 Form 10-K that will cover the transition period for our new fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the March 31, 2021 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2021.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC, Kuvera France S.A.S., Apex Tek, LLC, SAFETek, LLC, S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC, iGenius Global LTD, Investview Financial Group Holdings, LLC, and Investview MTS, 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.
Revenue Recognition
Subscription Revenue
The majority 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 10-day 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 product. 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, 2021 and March 31, 2021 our deferred revenues were $2,820,120 and $1,561,188, respectively.
Mining Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we leased computer 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 computer equipment. We use the computer equipment to validate and process public blockchain transactions (commonly referred to as “mining”). As compensation for mining, we are issued block rewards and transaction fees from public blockchain networks in the form of newly created cryptocurrency units. Our mining activities constitute the ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately granted to us as a result of our mining activities.
Cryptocurrency Revenue
We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party providers. The various packages include different amounts of coin with differing rates of returns and terms and, in some cases, include a product protection option that allows the purchaser to protect their initial purchase price. The protection allows the purchaser to obtain 50% of their purchase price at five years or 100% of their purchase price at ten years. Both the coin and the protection option are delivered by third-party providers.
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We recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers at the time of order placement. All customers are given two weeks to request a refund, therefore we record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party providers to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our providers on our books. As of September 30, 2021 and March 31, 2021 our customer advances related to cryptocurrency revenue were $870,168 and $2,067,313, respectively.
Fee Revenue
We generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory fees in the month following recognition.
Revenue generated for the six months ended September 30, 2021 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 26,436,065 | $ | 18,205,143 | $ | 16,710,321 | $ | - | $ | 61,351,529 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (1,552,154 | ) | - | - | - | (1,552,154 | ) | |||||||||||||
| Amounts paid to providers | - | (10,801,710 | ) | - | - | (10,801,710 | ) | |||||||||||||
| Net revenue | $ | 24,883,911 | $ | 7,403,433 | $ | 16,710,321 | $ | - | $ | 48,997,665 | ||||||||||
For the six months ended September 30, 2021 foreign and domestic revenues were approximately $25.5 million and $23.5 million, respectively.
Revenue generated for the six months ended September 30, 2020 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 10,159,115 | $ | - | $ | 3,836,285 | $ | 7,723 | $ | 14,003,123 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (659,970 | ) | - | - | - | (659,970 | ) | |||||||||||||
| Amounts paid to providers | - | - | - | - | - | |||||||||||||||
| Net revenue | $ | 9,499,145 | $ | - | $ | 3,836,285 | $ | 7,723 | $ | 13,343,153 | ||||||||||
For the six months ended September 30, 2020 foreign and domestic revenues were approximately $8.9 million and $4.4 million, respectively.
Revenue generated for the three months ended September 30, 2021 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 14,904,004 | $ | 2,329,566 | $ | 8,338,759 | $ | - | $ | 25,572,329 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (869,790 | ) | - | - | - | (869,790 | ) | |||||||||||||
| Amounts paid to providers | - | (1,331,439 | ) | - | - | (1,331,439 | ) | |||||||||||||
| Net revenue | $ | 14,034,214 | $ | 998,127 | $ | 8,338,759 | $ | - | $ | 23,371,100 | ||||||||||
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For the three months ended September 30, 2021 foreign and domestic revenues were approximately $13.6 million and $9.8 million, respectively.
Revenue generated for the three months ended September 30, 2020 is as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Fee Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 5,599,155 | $ | - | $ | 2,493,739 | $ | 3,710 | $ | 8,096,604 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (343,267 | ) | - | - | - | (343,267 | ) | |||||||||||||
| Amounts paid to providers | - | - | - | - | - | |||||||||||||||
| Net revenue | $ | 5,255,888 | $ | - | $ | 2,493,739 | $ | 3,710 | $ | 7,753,337 | ||||||||||
For the three months ended September 30, 2020 foreign and domestic revenues were approximately $7.3 million and $0.5 million, respectively.
Recently Issued Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Under current GAAP, there are five accounting models for convertible debt instruments. ASU 2020-06 removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adopting the ASU’s guidance, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium. Additionally, for convertible debt instruments with substantial premiums accounted for as paid-in capital, the FASB decided to add disclosures about (1) the fair value amount and the level of fair value hierarchy of the entire instrument for public business entities and (2) the premium amount recorded as paid-in capital. ASU 2020-06 will be effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the potential impact of the adoption of this accounting pronouncement to its financial statements.
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 acting Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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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 acting Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective.
Changes in Internal Controls
There were no changes in our internal controls over financial reporting during the fiscal quarter ended September 30, 2021, 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
We have recently received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. We have reason to believe that the focus of the SEC’s inquiry involves whether certain federal securities laws were violated in connection with, among other things, the offer and sale of cryptocurrency products and the operation of our subscription-based multi-level marketing business now known as iGenius. In the subpoena, the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities laws and or any other law. We believe that we have complied at all times with the federal securities laws. However, we are aware of the evolving SEC commentary and rulemaking process relative to the characterization of cryptocurrency products under federal securities laws that is sweeping through a large number of businesses that operate within the cryptocurrency sector.
We intend to cooperate fully with the SEC’s investigation and will continue to work with outside counsel to review the matter.
ITEM 1.A – RISK FACTORS
We have received a subpoena from the SEC.
On November 9, 2021, we received a subpoena from the SEC for the production of documents. We have reason to believe that the focus of the SEC’s inquiry involves whether we have violated the federal securities laws in connection with, among other things, the offer and sale of cryptocurrency products and the operation of our subscription-based multi-level marketing business now known as iGenius. We intend to fully cooperate with the SEC in this matter. Responding to the subpoena will and may continue to entail cost and management’s attention. The existence of an SEC investigation and its potential outcome could have a material adverse effect on us and our business and operations.
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.
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ITEM 5 – OTHER INFORMATION
On November 16, 2021, we and DBR Capital, LLC, entered into a Third Amendment to the Amended and Restated Securities Purchase Agreement dated as of November 9, 2021 (the “Agreement”). The new amendment changes the deadlines for the fourth and fifth closings under the Agreement from December 31, 2021, to December 31, 2022. 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.
The new amendment also revised the language of the change of control provisions to reflect James R. Bell’s appointment as our acting Chief Executive Officer.
The foregoing information is intended as a summary of the reported amendment and is qualified in its entirety by reference to the complete text of the amendment, which is filed as Exhibit 10.97 to this Report and incorporated herein by reference.
ITEM 6 – EXHIBITS
The following exhibits are filed as a part of this report:
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| Exhibit Number* | Title of Document | Location | ||
| Item 32 | Section 1350 Certifications | |||
| 32.01 | Certification of Acting Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
| 32.02 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
| Item 101*** | Interactive Data File | |||
| 101.INS | Inline XBRL Instance Document | This filing. | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | This filing. | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | This filing. | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | This filing. | ||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | This filing. | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | This filing. | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | This filing. |
| * | All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document. Omitted numbers in the sequence refer to documents previously filed as an exhibit. |
| ** | Identifies each management contract or compensatory plan or arrangement required to be filed as an exhibit as required by Item 15(a)(3) of Form 10-K. |
| *** | 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: June 1, 2022 | By: | /s/ Victor M. Oviedo |
| Victor M. Oviedo | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: June 1, 2022 | By: | /s/ Ralph R. Valvano |
| Ralph R. Valvano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Accounting Officer) | ||
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